As a homeowner, a foreclosure and a short sale are two transactions that you need to be aware of, so today I’ll discuss what you need to know about each process.
How does the foreclosure process work?
If you fall behind on your mortgage payments and you get a foreclosure notice, it means the bank has filed to repossess your property. In Ohio, the process takes between six and eight months, and they eventually hold an auction for the house where they or an investor can buy it. Once it’s sold, the original owner still has a 30-day right of redemption where, if they can pay off what they owe, they can buy the house back. If they can’t, the sale is confirmed and they must vacate the property.
Foreclosure damages your credit to a certain degree, and you won’t be able to buy another house for five to seven years afterward.
What is a short sale?
Basically, it’s when a property is sold for less than the owner’s current mortgage balance. In this situation, the bank will look at your finances, appraise the property in its as-is condition, and approve the sale of the property for less than what’s owed.
Why would the bank do this? In most cases, it’s cheaper than going through the foreclosure process. Once they foreclose on a property, it’s their responsibility to maintain and insure it. A short sale is less harmful on your credit than a foreclosure in that you’ll be able to potentially buy another home in as little as two years.
If you do get a foreclosure notice, a short sale is a better option than going through with the foreclosure. Most banks have a loss mitigation department who can assist you with the process, and after a couple of years, you can become a homeowner again.
If you’re facing the prospect of a foreclosure or short sale, give me a call or send me an email and I’d be happy to guide you through either process. If you have any other real estate questions, feel free to reach out to me as well. I’d love to speak with you.