If you deal in the real estate or if you have heard the word like foreclosure and short sale, you will definitely know the difference between the two. But the harsh truth is; only some people know the difference between the short sale and foreclosure. This is the point when people suffer from the biggest losses. If you are planning to invest in, you should know that there is a huge difference between the both. In this article, we will know what exactly the difference between the short sale and foreclosure is.
Suppose, you want to settle the things with the loan lender and consume the property, you can choose for the short sale rather than the foreclosure. If a mortgage lender or company agrees to settle at the discounted money which is lesser as compared to the actual amount owned by you, known as the short sale. Let us learn more about the short sale and foreclosure and what is the difference between the two?
Difference between short sale and foreclosure:
Sale of the property:
When lender take a forceful action on the seller, known as foreclosure and when there is mutual decision and agreement between the seller and lender, known as short sale.
If you have a short sale or foreclosure, you will experience it for rest of your life. Whenever you go to get the loan, you will be reminded by the same thing. Foreclosure will make you suffer from the higher interest rates whereas short sale is not needed to be declared on the normal loan application.
Cost and length of the time period:
Obviously, foreclosure is a more embarrassing situation as compared to the short sale. Short sales are less costly and faster as compared to the foreclosure. Foreclosure involves the shame and embarrassment but the short sale does not. In some cases, the lender can also sue you but there is nothing like that in the short sale.
Credit report or history:
Foreclosure have a serious impact on your credit report but the short sale does not throw any impact on your credit report.