“Some of us are on the brink of disaster; no equity, struggling to make payments. What’s best; short sale or foreclosure??? ”
Answer:
I’m very sorry to hear about your situation. Here’s my objective opinion of the pro’s and con’s of a Short Sale vs. Foreclosure PLUS one other possibility.
Short Sale:
– Arguably a little better for your credit than a foreclosure. To be approved for a short sale, you typically need to be several months behind on your payments, which will hurt your credit.
– Better emotionally than losing your home to foreclosure
– Involves the hassle of having your home on the market and waiting a very long time to find out if the bank will approve your short sale. Many are not approved.
Foreclosure:
– Allows you to stay in the home longer (payment free)
– After the foreclosure, you’d likely receive “cash for keys” of a $1,000 to $3,000 to help you move
There is one other possibility: loan modification.
In some cases, banks will actually modify (decrease) mortgage loan interest rates and payments to allow people to stay in their homes.
Your first step is to contact your lender and ask to talk with someone about a loan modification.
I want to stress this:
You can do this on your own at little/no cost and do NOT have to pay anyone to help you.
However, I’ve heard some people have gotten good (better?) results paying a consultant $500 to $3,000 for assistance. If you want to explore this option, know that all such consultants are NOT created equal.
In fact, there’s a cottage industry of real estate agents and others going to mini-seminars to become “loan modification professionals”. I suspect most would be no better (or perhaps even worse) than handling it yourself.
I suggest you try it on your own at first…
