If you're in the store 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 excellent mortgage balance to avoid foreclosure proceedings. The lender may forgive the incompatibility or the existing homeowner may have to make arrangements to determine 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 possible to cause headaches) for possible home buyers. If you're open to inspecting these types of homes on your quest - remember these tips:
* Be inpatient - As with any proceeding where there are many parties and legal entities involved, it's important to remember that these types of purchases can take time. If you're only looking 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 usually close faster than short sales, sometimes foreclosed homes are in worse shape. But the benefit of the home that is in best shape is sometimes outweighed by the lengthy process. With short sale, numerous parties are complex so gaining all the essential approvals takes longer. Knowing this before you head into the process may make being inpatient easier.
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