If you're in the shop for a new home, you've probably heard these buzzwords: short sale & foreclosure, but you may not know what they mean. Here are the basic definitions of these two terms:
Foreclosure (or Repossession) - Foreclosure is the legal process by which the mortgaged properties may be sold to pay off a mortgage loan that is in default. A foreclosed home is a asset that the mortgage lender has taken into possession. These homes are typically winterized (plumbing drained, water turned off) to sacrifice damage to the home.
Short Sale Vs Foreclosure: What You Need to Know
Short Sale - Are pre-foreclosure homes. The mortgage lender has agreed to accept less than the superior mortgage balance to avoid foreclosure proceedings. The lender may forgive the divergence or the existing homeowner may have to make arrangements to resolve the remaining amount.
Now that you know the basic definitions, you can begin to understand how these types of homes can offer big opportunities (and have the inherent to cause headaches) for inherent home buyers. If you're open to inspecting these types of homes on your crusade - remember these tips:
* Be inpatient - As with any proceeding where there are complicated parties and legal entities involved, it's leading to remember that these types of purchases can take time. If you're only seeing at foreclosures and short sales, it may take you a long time to find a home in the health that you want. Once you find your dream home and submit your offer, it can take weeks or sometimes even months before you hear back from the bank. While foreclosures regularly close faster than short sales, sometimes foreclosed homes are in worse shape. But the benefit of the home that is in great shape is sometimes outweighed by the lengthy process. With short sale, numerous parties are involved so gaining all the critical approvals takes longer. Knowing this before you head into the process may make being inpatient easier.
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