When facing foreclosure in Dallas TX you need to act quickly to avoid damage to your credit score. If you are wondering, “what is the difference between a short sale and a foreclosure,” you are already on the right track. Creative thinking may help you avoid foreclosure and move on with your life. In this article, we will dive into the ins and outs of a short sale in Dallas TX.
What’s the difference between a short sale and a foreclosure?
In Dallas, a short sale transaction is when the mortgage lender allows the borrower to sell their house for less than is owed on the mortgage. Basically, if you are upside down on your mortgage and need to sell your house quickly (especially if costly repairs are needed) your mortgage lender may settle for less than you owe to avoid the foreclosure process.
During the foreclosure process, lenders repossess the house to cover the amount owed on your mortgage. The foreclosure process can be lengthy and comes at an expense to the bank. If you are behind on your mortgage payments, it may be beneficial for both you, and your lender, to engage in a short sale transaction. Remember, a short sale is far less damaging to your credit score than a foreclosure.
Can you do a short sale while in foreclosure?
Yes! In fact, a short sale can be a smart way to mitigate foreclosure (here’s a great definition of what a foreclosure is in case you’re not sure) on a mortgage, although they can be difficult to attain in today’s market, they often prove to be a simpler way to resolve any debt left over from a loan. A short sale is like giving your house back to the bank.
Is it better to do a short sale or foreclosure?
It’s better to do a short sale than to lose your home to foreclosure. In a short sale, the bank gets paid and you have a chance to prevent damage to your credit score – everyone wins. If you allow your home to go into foreclosure, not only will you lose your house, but it will take years before you can qualify to purchase real estate again.
What are the benefits of a short sale vs foreclosure in Dallas TX?
Here are a few reasons you may want to consider short sale on your Dallas home:
- You Can Avoid Foreclosure With a Short Sale in Dallas TX
The number one benefit of a short sale is that you avoid a foreclosure on your home. During a short sale in Dallas Fort Worth, your mortgage lender accepts less than what is owed on your mortgage, freeing you from the debt that you were unable to afford.
- You Can Avoid Damage to Your Credit Score in Dallas TX
A short sale relieves the debt that is left over from what is owed on the mortgage, letting both the bank and the seller move on. A short sale is also easier on your credit score, which can allow a homeowner the ability to recover in the long run. Your credit report will only show a pre-foreclosure status, which reduces your credit rating minimally compared to a foreclosure.
The devestating consequences of foreclosure include:
- Foreclosure usually stays on your credit record for up to 7 years. Not only does foreclosure lead to all kinds of financial problems and stress, the negative impact of foreclosure can remain visible on your credit record for a very long time.
- After a Foreclosure, it May Take up to 7 Years to Qualify for a Mortgage. Until your credit score recovers from foreclosure, you will be unable to qualify for a home loan.
- You may not even be able to rent. If you lose your home to foreclosure, you may find it difficult to find a place to rent in the Dallas Fort Worth metroplex. Whether applying to rent an apartment or a house, landlords will typically pull your credit score. You may also have to disclose a foreclosure on your rental application.
With a foreclosure, you face all kinds of ramifications with your credit. Buying a car and renting a house may be impossible through the normal bank loan routes. If you work with money at your job you could even face termination if your employer puts a lot of stock in that kind of thing (most employers won’t but it has been done before).
- It’s Easier to Qualify to Buy a New House After a Short Sale
As mentioned before, a foreclosure can last for a long time, making it impossible to purchase a mortgage again for up to 7 years. Short sales offer a little more flexibility for the seller, allowing new home applications only 2 years after the filing depending on the bank. It also makes a mortgage lender more likely to approve your loan than if you had a full foreclosure, getting you back into a home faster.
Again, this all depends on the actual bank / lender you’re working with… so if they’re giving you a hard time a year or two after a short sale… shop around and find another bank to work with.
- Usually No Fees Involved
One potential benefit of the short sale in Dallas is there are usually no fees associated with the process from the bank. The bank just wants to get the note off of their books… and if it can be proven that your house is “underwater” (you owe more than your house is worth)… and you’re at the risk of walking away from the house… the bank may rather work out a short sale instead of going through a costly foreclosure.
- With a foreclosure, your mortgage lender may tack on extra fees that only make the damage worse. Some real estate consultants may charge a fee for helping facilitate the foreclosure with your bank… so check with them before you enlist a real estate agent or firm in helping you with this.
Short Sale Homes in Dallas Fort Worth
Short sales were really common in the market a couple years back when the flood of foreclosures hit the Dallas market… but as foreclosures have slowed down and home values have climbed back up a bit… lenders are a little less likely to offer a short sale as an option as they used to be (but they are still doing a lot of them!).
Getting a Short Sale – What You May Need To Provide
You will have to provide the bank with proof of being unable to pay your mortgage payments. This can be difficult and is best resolved by finding a good real estate attorney in your area that has experience dealing in this type of law.
Sell My House Fast Dallas – Sell My House Fast Fort Worth
If you don’t know who to contact or where to turn to see if a short sale may be a good option for you… get a hold of us.
We won’t charge a thing to discuss your situation with you and let you know your options.
And we can even give you guidance and pointers at absolutely no cost or obligation.
Sometimes we’re actually able to do the work for you or even buy the house from you to get you out from under that mortgage and avoid foreclosure… so that may be a viable option for you.
Our company, Happy Buy Homes may be able to guide you in the right direction on how to give yourself the best shot at a bank approving a short sale with your Dallas area house… so connect with us by calling (817) 345-6444 or shoot an email to us through our contact page here.
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We buy Dallas houses and we work with home sellers like yourself who are having troubles getting out of your house the traditional way… or who can’t (or don’t want to) go the usual route of listing with an agent.
Get ahold of us anytime to discuss your situation. We’re here for you!
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