Whether you’re a buyer or a borrower/seller, a short sale, and foreclosure each present different advantages and difficulties and in this article we are going to talk about the differences of a Short Sale vs Foreclosure In Louisville and which one you should choose.
What Is A Foreclosure In Louisville Kentucky?
In simple terms… “A foreclosed home is one in which the owner is unable to make his mortgage loan payments and the bank repossessed the home” (source). If you stop making your house payments… your lender has the right to foreclose on your property so they can attempt to recoup their money that was lent to you. Nobody wants to go through a Foreclosure! They stay on your credit report for 7 years!
A home is typically foreclosed on in Louisville when a borrower fails to make mortgage payments. The lending institution assumes ownership and possession of the property, evicting the borrower. These properties are then sold at auction or more traditional means using a real estate agents. A foreclosure can damage the credit rating of a borrower, and make it very difficult to obtain a mortgage for many years for a house or a car.
Depending on the state that you live in… a foreclosure can work in different ways. Check out the foreclosure process information over here at the Kentucky Homeownership Protection Center. This is a good resource to see the in depth process of foreclosures in Louisville KY.
What Is A Short Sale In Louisville Ketucky?
In a short sale, the home is still owned by the borrower.
The definition of a short sale is… “A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property, and the property owner cannot afford to repay the liens’ full amounts and where the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt” (source: Wikipedia)
A lot of time, a short sale is an option agreed upon by borrowers and lenders. In a short sale, the home is sold for less than the outstanding balance of the mortgage with both parties agreeing to this. The unpaid balance (known as the deficiency) also known as a Deficiency Judgment may or may not still be owed by the borrower depending on how the lender structures the deal and also the laws of your state.
The short sale process in Louisville, Kentucky, while not a swift solution, typically presents a more favorable alternative to foreclosure.
The timeline for a short sale can vary, often spanning from 3 months to over a year. However, this duration is influenced by several factors, including lender responsiveness and buyer patience. Despite the time commitment, short sales often result in less damage to the homeowner’s credit score compared to foreclosures.
Strategic planning, negotiation skills, and an understanding of the local market can significantly streamline the process. Therefore, when asked, “How long does the short sale process take in Louisville, Kentucky?“, it’s important to remember that each case is unique, but we have usually seen 60 days to 6 months when we are handling it because we have experience with these. Call us at 502-461-1450 if you are considering a short sale in Louisville.
Short Sale vs Foreclosure In Louisville – Your Options
While both options can have negative impacts on you and your borrowing history, a short sale often has less of an impact on the borrower’s credit score. A foreclosure could impact a borrower’s credit score by 300 or more points, where a short sale may only dent the credit score by 100 points. Foreclosures also stay on your credit report for 7 years while short sales usually only stay on for 2 years.
Borrowers who are foreclosed on are often ineligible to purchase another home for 5-7 years with a traditional mortgage which is a long time, where under certain circumstances, a short sale borrower can purchase immediately in rare cases but most of the time after 2 years. I believe this is due to the fact that a short sale shows the borrower is trying to pay back the debts of the loan.
As many Americans struggle with an economy that has yet to completely recover from the 2008 crash completely, People are having a hard time making monthly mortgage payments. Choosing between being foreclosed and initiating a short sale (or a 3rd option… selling your Louisville house fast )is an easy choice for a borrower having troubles paying their mortgage on time.
Our suggestion is always this.
- Talk with your lender and discuss ways that they can work with you on your loan. We offer this service where we can help guide you in the right direction if you run into issues with your lender… just reach out to us on our Contact page and we’ll discuss your situation and do our best to help you out.
- Attempt a short sale or other programs your lender may have that forgives part of your loan, creates a new / more affordable monthly payment so you can get back on your feet, etc. We can help you with the short sale process and also purchase your home as well.
- 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 Louisville Cash Real Estate to sell your house fast in Louisville 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 BELOW!
- Foreclosure. Last resort is to let the house fall into foreclosure. This is the worst possible scenario. It’ll harm your credit and you could still be left with money owed to the bank even after the foreclosure is finished and have nowhere to live either, at least with selling you can easily find somewhere and possibly even get money in your pocket.
By knowing your options, you increase your likelihood at a better outcome and may be able to dodge a significant impact on your credit score which is always a plus, allowing you to purchase a new home when your situation improves and giving you another chance. A foreclosure on your credit report makes that possibility extremely difficult for 5-7 years, so if you have the opportunity, a short sale can be the better option for you.
Have a pending foreclosure? We’d like to make you a fair all-cash offer on your house.