When it comes to selling a property, short sales and foreclosures each come with their own set of pros and cons for both buyers and sellers.
What Is a Foreclosure in Lehigh Valley, PA?
In simple terms, a foreclosure occurs when the homeowner is unable to pay their mortgage, and the lender repossesses the property to recover their funds. Once the borrower stops making payments, the lender can foreclose, evict the homeowner, and then sell the house—either at auction or through traditional real estate channels. Foreclosures can severely damage a borrower’s credit score, making it difficult to qualify for future loans for years.
Foreclosure processes vary depending on the state, so check out the foreclosure process information for more details.
What Is A Short Sale?
In a short sale, the property remains under the borrower’s ownership.
A short sale is defined as a real estate transaction where the sale proceeds are less than the outstanding debts secured by liens on the property. In this situation, the homeowner is unable to fully repay the liens, and the lien holders agree to release their claims by accepting less than what is owed.
In certain cases, a short sale is mutually agreed upon by both the borrower and the lender. The property is sold for less than the mortgage balance, but whether the borrower is still responsible for the remaining debt (known as the deficiency) depends on the agreement.
This process can be time-consuming since multiple lenders may hold stakes in the mortgage. For the sale to proceed, all parties must approve the terms, and the deal can fall apart if even one lender disagrees.
Short Sale vs Foreclosure – Which is Best?
While both options carry consequences, a short sale generally has a smaller impact on a borrower’s credit. A foreclosure can lower a credit score by 300 points or more, whereas a short sale might only reduce it by about 100 points.
After a foreclosure, borrowers are often unable to qualify for a new home mortgage for 5-7 years. On the other hand, under certain conditions, a borrower who completes a short sale may be able to buy a new home right away.
Many Americans continue to face challenges in making mortgage payments, given the lingering effects of the 2008 financial crisis. For borrowers struggling to keep up with payments, deciding between foreclosure and initiating a short sale (or a third option, selling your Lehigh Valley house fast) is a crucial choice.
In some cases, lenders are open to cooperating with borrowers to arrange a short sale, as this can help avoid the costly and lengthy process of foreclosure.
Here’s our recommendation:
- Talk with your lender and discuss ways that they can work with you on your loan. Start by talking to your lender and exploring ways they can work with you on your mortgage. If you’re facing difficulty with your lender, we can help point you in the right direction—just reach out to us via our Contact page to discuss your situation.
- Consider a short sale or other programs your lender might offer, such as loan forgiveness or restructuring your loan to create a more affordable monthly payment.
- If the bank isn’t willing to work with you very much… your best option may be to sell your house. Work with a local real estate house buyer service like iBuyLehigh to sell your house fast for an all-cash offer. If you’re interested we can look at your situation and make you a fair offer on your house within 24 hours. Just fill out the form on our website over here >>
If your lender is unwilling to cooperate, your best option may be to sell your house. Partner with a local real estate buying service like iBuyLehigh to
When it comes to selling a property, short sales and foreclosures each come with their own set of pros and cons for both buyers and sellers.
What Is a Foreclosure in Lehigh Valley, PA?
In simple terms, a foreclosure occurs when the homeowner is unable to pay their mortgage, and the lender repossesses the property to recover their funds. Once the borrower stops making payments, the lender can foreclose, evict the homeowner, and then sell the house—either at auction or through traditional real estate channels. Foreclosures can severely damage a borrower’s credit score, making it difficult to qualify for future loans for years.
Foreclosure processes vary depending on the state, so check out the foreclosure process information for more details.
What Is A Short Sale?
In a short sale, the property remains under the borrower’s ownership.
A short sale is defined as a real estate transaction where the sale proceeds are less than the outstanding debts secured by liens on the property. In this situation, the homeowner is unable to fully repay the liens, and the lien holders agree to release their claims by accepting less than what is owed.
In certain cases, a short sale is mutually agreed upon by both the borrower and the lender. The property is sold for less than the mortgage balance, but whether the borrower is still responsible for the remaining debt (known as the deficiency) depends on the agreement.
This process can be time-consuming since multiple lenders may hold stakes in the mortgage. For the sale to proceed, all parties must approve the terms, and the deal can fall apart if even one lender disagrees.
Short Sale vs Foreclosure – Which is Best?
While both options carry consequences, a short sale generally has a smaller impact on a borrower’s credit. A foreclosure can lower a credit score by 300 points or more, whereas a short sale might only reduce it by about 100 points.
After a foreclosure, borrowers are often unable to qualify for a new home mortgage for 5-7 years. On the other hand, under certain conditions, a borrower who completes a short sale may be able to buy a new home right away.
Many Americans continue to face challenges in making mortgage payments, given the lingering effects of the 2008 financial crisis. For borrowers struggling to keep up with payments, deciding between foreclosure and initiating a short sale (or a third option, selling your Lehigh Valley house fast) is a crucial choice.
In some cases, lenders are open to cooperating with borrowers to arrange a short sale, as this can help avoid the costly and lengthy process of foreclosure.
Here’s our recommendation:
- Talk with your lender and discuss ways that they can work with you on your loan. Start by talking to your lender and exploring ways they can work with you on your mortgage. If you’re facing difficulty with your lender, we can help point you in the right direction—just reach out to us via our Contact page to discuss your situation.
- Consider a short sale or other programs your lender might offer, such as loan forgiveness or restructuring your loan to create a more affordable monthly payment.
- If your lender is unwilling to cooperate, your best option may be to sell your house. Partner with a local real estate buying service like iBuyLehigh to sell your house fast for an all-cash offer. If you’re interested, we can evaluate your situation and make you a fair cash offer within 24 hours. Just fill out the form on our website over here >>
- Foreclosure should be your last resort. It can severely damage your credit, and even after the foreclosure process, you may still owe money to the bank.
By understanding your options, you can avoid a significant hit to your credit score and keep your chances of purchasing another home intact. A foreclosure can stay on your credit report for 5-7 years, making it harder to recover, whereas a short sale could provide a quicker path to financial recovery.
Facing foreclosure? We’d like to make you a fair, all-cash offer on your home.