There are few options when a person is faced with a foreclosure. Learning which ones are available for a person to take will help alleviate the stress involved from losing your home. A person can choose what is called a short sale. This type of sale is when the amount of the sell is less than the balance owed to the mortgage lender. The person who owns the mortgage will agree to take less than what was originally owed. Most mortgage lenders will do this when there is a financial hardship that has gone as far as foreclosing.
The "short sale" can be turned down by a lender, but in most situations of financial hardship, they will most likely approve it in order to avoid foreclosing.
A short sale is typically executed in order to prevent foreclosure If a bank believes that they will potentially lose the whole house to foreclosure, they will approve the short sale. The costs that come with foreclosing can outweigh losing a certain amount of money in the long run.
The mortgage lender will figure out the equity of the property through an appraisal. This can also help an individuals credit from dipping even further. A foreclosure can have drastic effects on a persons credit rating.
The process of a "short sale" will move much quicker and cost less than an actual foreclosure of a property.