Short Sale, Foreclosure, or Auction: What’s Your Best Option?

Home Buying: What You Need To Know

Buying a home can seem like an overwhelming process. On top of everything you will need to know about how to buy a home, you should also know what happens if you can no longer make your mortgage payments.

While mortgages are secured debt (meaning that the house is what secures that loan as collateral), CreditGUARD specializes helping people get back on track with their credit cards, personal loans and medical debt. If you’re behind on any of these, don’t stop paying your mortgage to catch up on other bills. Call CreditGUARD today at 800-500-6489. Then, read on to learn more about short sales, foreclosures and auctions.

Knowing what happens if you default on your home loan, what options are available to you if this should happen and, most importantly, how it will affect your credit, will help you better understand what decisions you should make when in the home buying process.

Understanding Short Sales

A short sale allows homeowners who are struggling to make their monthly mortgage payments to work with their lender to sell their home. Short sales are usually priced below market so that they are attractive to first-time homebuyers or investors who may be looking to flip or rent the home. This price is less than or equal to what the owner still owes on the mortgages but offers an alternative to foreclosure when a homeowner needs to get out from under mortgage debt. This option allows the owner to come away with less damage to their credit than if they were to foreclose on their house.

A short sale is a complicated real estate transaction that has large implications for the owner. Due to the magnitude of the consequences involved to your credit, this type of real estate transaction should only be handled by a real estate broker who has considerable experience with the short sale process. Make sure your broker not only has the experience but has been successful in negotiating short sales for their clients to ensure that your credit is preserved as best as possible. If you choose not to short sell your home, your property may be foreclosed upon.

Understanding Foreclosures

Foreclosure is the process during which a lender takes back possession of an unpaid property. During this process, there are several stages when the homeowner has an opportunity to bring the loan current in order to avoid foreclosure altogether. If the loan isn’t brought current, a foreclosure sale date is arranged and a notice of sale will be sent to the owner. Additionally, this notice of sale will be posted on the property and recorded at the County Recorder’s Office. If you are never able to correct the default on your home loan, the foreclosure will go through, and the property will go up for auction.

Understanding Auctions

At auction, the price of the property will be set by the lender. This is called the opening bid and is typically equal to the outstanding loan balance, interest accrued, and any additional fees and attorney fees. If the opening bid is not met, the property is deemed Real Estate Owned (REO) which usually happens if the property is worth less than the total amount owed to the bank or lender.

How CreditGUARD Can Help

While mortgages and home equity loans are considered secured debt, credit cards and other types of debt like medical debt and personal loans are considered unsecured. When it comes to these unsecured debts, CreditGUARD can help if you’re behind on your payments.

Getting your payments in line on your unsecured debt can sometimes be the help you need to fix your monthly budget so that you can afford your mortgage or secured loan payments.

If you’re currently behind on your mortgage or other secured debt payments because of credit card debt, CreditGUARD may be able to help you get back on track, depending on your current status.

Our certified credit counselors are well-equipped to negotiate with creditors on your behalf to lower your interest and all you do is make one easy monthly payment. Learn more by calling CreditGUARD today at 800-500-6489