Which Is Better? A Foreclosure or Short Sale of Your Minneapolis St Paul House?

We all have rough times every now and again. The lender may be calling you about your mortgage note that is overdue and you are wondering if a foreclosure sale or a short sale for your {market_city] house is the Answer? Is one better than the other?

As a property owner, having a rough time may mean losing the biggest investment of your life: your Minneapolis St Paul house. If you are unable to make your mortgage and insurance payments, you are about to be facing foreclosure with your lender if you miss a certain amount of payments; this all depends on your mortgage document. We are going to be discussing what is the better solution when you are facing a foreclosure sale: Foreclosure or Shortsale.  You might be surprised by the answer.  Keep reading.

Foreclosures Happen To The Best Of Us

In most cases, it is best to avoid a foreclosure process, but if you are already behind on your payments you are going down that path.  The whole foreclosure process will not begin until you have missed between 3-6 payments on your mortgage loan. First of all, it is important to understand that foreclosure is a process and it takes time. The first step is called pre-foreclosure. This means that your Minneapolis St Paul property is in default and the bank may or may not foreclose on the property. You will be notified by the bank and given proper notice and what your options are.  Normally this is the best time to get on the offense because the opportunity for problems is coming.

The second step is a short sale. This is where the owner is trying to sell the property. often at an amount that is lower then what is owed to the bank.  Shortsales need to be completed before the bank forecloses on the house. Depending on the bank, they may or may not accept offers less than the balance due at this point. If the owner can get the bank to short sell, it is much better for their credit than a foreclosure.

The third step is the foreclosure auction. This is when the bank is trying to get the most money for the property in a short amount of time.

The fourth step is an REO, which stands for “Real Estate Owned”. If the property does not sell at auction, the bank then repossesses the property and places it on the market for sale. If you were around in 2008 and 2009 we saw a flood of properties on the market because of the downturn in the economy.  The homeowners at that time were not able to make their payments, the values of their homes dropped from 15% to 40% in months and their home was foreclosed on.  The Bank, in turn, had to sell those homes at a discount on the retail market mostly to investors.

Based on the process outlined above, “foreclosure” is the bank taking title or “possession” of your Minneapolis St Paul house. This would impact your credit score and would also show up in any reports that future landlords would run. The foreclosure stays on your credit for at least 7 years before falling off, sometimes 10 years. Depending on your situation, you may have more time to live in your home if you let it go to foreclosure because of the statutory redemption period. This time frame depends on whether you took title via mortgage or deed of trust. If you have a mortgage, then the process may take as quick as 30 days, or as long as 2 years. At the end of the redemption period, if you have not reinstated your loan and are still not able to make your payments, then you really have to move out. If you took title through a deed of trust, there is typically no statutory redemption period, and you have to move out immediately. 

Being educated on the foreclosure process and the different steps take away some of the stress many of us feel when there is something unknown that is happening to us. Seek help for foreclosure in Minneapolis St Paul by contacting a trusted counsel to help walk you threw the steps and help you determine what you might consider doing.  Give your team a call at (612) 444-5088 and lets talk through your options.

Is A Short Sale Really The Answer?

During the foreclosure process as described above, you have the opportunity to list your Minneapolis St Paul house up for sale as a short sale. The best time for a short sale is the time period when you realize you are unable to make your payments as outlined in your loan agreement, and before the lender files, legal action against you and officially owns your house. You will be able to list your house on the market and try to get an offer that will satisfy the balance of your loan or get really close to it. This might be a difficult process because you will have to be in constant communication with the lender about the offers you receive and will have to wait for them to approve or counter offer the offers you receive. Most often to would be wise to hire a Minneapolis St Paul real estate agent who understands the short sale process.  It can be tricking and negotiating with a bank to get a short sale done takes commitment and strategy to get it done. With an agent on your side and you have successfully marketed your preforeclosure home and found a buyer you can approach the bank. with that offer in hand, your agent contacts the bank and asks them to willing to accept the offer, selling your Minneapolis St Paul house to that buyer would relieve you of some of the credit damage of having a foreclosure, although it would still negatively affect your credit. 

To Conclude, if you have the time and you are late on your mortgage, find an agent to help you do a short sale vs going toward foreclosure.  A Short sale if done in time, will save you money and your future lending borrowing power compared to losing everything through a  foreclosure.

An option many don’t even think about and it depends on what the status of your home is in.  If you are facing a foreclosure and your house is worth more than the amount that is owed on the house, but you just can not get caught up on the payments. Consider selling your Minneapolis St Paul house fast to a professional home buyer like us at Minnesota Cash Home Buyers. We pay cash for homes every day that people are being foreclosed on and can not come up with the amount to catch up on their loans.  We can put together a fair offer on your home and get the banks from continuing to come after you.  Your credit is spared, and you get some cash in your pocket.

The best option would be to avoid the foreclosure process altogether and negotiate a sale of your property before you get to the point of missing payments on your loan.

Contact Minnesota Cash Home Buyers today at (612) 444-5088 to see what options we could offer you so you wouldn’t have to decide which would be better, a foreclosure or short sale of your Minneapolis St Paul house.

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