Arizona Short Sale Articles →     

Arizona Short Sale      Arizona Short Sale Help      Short Sales In Arizona      Short Sell Investment Property

The Consequences Of A Foreclosure Vs An Arizona Short Sale

by Charlie Allred

Lenders are currently realizing that foreclosing upon a home, which can be principally defined as the procedure of the lender siezing control of your house, may not really be the best solution for them or perhaps the most valuable solution either. Notice: I utilized the phrase “siezing control of your house” because theoretically the bank owns your real estate when you have a bank loan on it. In a foreclosure, the mortgage lender normally takes on several expenses. For example, to complete an Arizona foreclosure proceeding and obtain power over the home a bank or lender will certainly sustain the following:

Legal charges regarding both court and an law firm
Repair and remodeling costs
Advertising expenditures essential to sell the property to purchaser
Loss of earnings in the form of zero home loan payments being made
Vandalism: many owners took their aggravations out by destroying the house they are forced to leave.

And of course, the bank will at this point posses a non performing asset. This shows the wrong way on their books and also suppresses their capability to lend cash to produce positive income. Once more, the bank doesn’t want to have your house… They want interest repayments on loaned funds. I have seen a lot of estimations; nevertheless, it’s been proven that banks can forfeit anywhere between 20% and 30% more by means of having to take an individual through a foreclosure than if they were to accept a short sale.

Generally the Az short sale is without a doubt much less expensive and this is an additional reason why a bank might opt for this option above foreclosure. With an Az short sale, the bank would just simply consent to receive a lower sum for the house and the home would probably go to market in a quite similar way as virtually any other property.

Of course, you will need a skilled real estate consultant when going into an Arizona short sale who knows the procedure completely mainly because of the increased paperwork as well as discussions essential to push a deal through. Be sure that the person who you hire will fight hard for your best interest! What about the credit implications you may ask? Actually, the credit consequences of a foreclosure as well as those of a short sale may vary to a degree. Any foreclosure will show up on your credit report for 7-10 years. The result can show up on your credit rating or FICO score which includes a net loss of 200-280 points which is a huge hit. Of course, it is advisable to avert such weighty consequences if at all possible.

If you opt to execute an Arizona short sale on your property, the credit professionals inform me that it’ll appear on your credit as a “pre-foreclosure in redemption”, a “settlement for less than owed”, or maybe as a “settlement”. Thus, as you can imagine the credit penalties could be somewhat different as you will not show anything with a status of “foreclosure”. Nevertheless, because most lenders will not consider the Arizona short sale until you become delinquent on your mortgage payments, your credit report will also reflect “late” on each of these payments. Of course, none of these options is a good thing to have, still it could very well be possible to get them off of your credit report within a few years or less in some cases, whereas the “foreclosure” is certain to hurt you for 7 – 10 years.

My personal credit consultants inform me that through using an Arizona short sale to do away with a burdensome debt, you can expect your credit score to drop by 100 – 200 points. Opinions will vary on this one. The fact is that while an Arizona short sale could possibly not be quite as bad as a foreclosure, you can still expect to have your credit severely affected. The good news is there are good credit repair programs available. It is possible to start a credit repair program as soon as you complete your short sale. And, in some cases, there may perhaps be the possibility of negotiating with the lender to have your short sale not reported to the credit agencies.

Learn more about the Arizona short sale process today!

Be Sociable, Share!

Leave a Comment

Previous post:

Next post: