Whether you’re a buyer or a lender/seller, both short selling and foreclosure have their advantages and disadvantages.
What is foreclosure in Montreal, Quebec?
Simply put, a seizure is a “procedure whereby certain assets of a debtor who is in default of paying his debts are handed over to the courts to be sold”. (source). If you stop paying your mortgage, your creditor has every right to initiate a foreclosure process on your property to collect the money he has lent you.
A house is normally foreclosed when a borrower fails to repay a mortgage as agreed. The creditor then takes possession of the property and ousts the borrower. The house will then be sold at auction or in a more traditional way using the services of a real estate agent. Foreclosure can negatively affect the borrower’s credit rating, making it difficult to obtain a new loan for years to come.
The entry process may vary depending on the province in which you live. For more information, visit this site if you live in Quebec.
What is a short sale?
When a home is sold short, the borrower is still the owner.
A short sale is the sale a property when the income obtained is insufficient to repay the debt attached to the property, and where the owner is unable to repay the debt in full and the creditor agrees to receive less than the amount due on the loan (freely translated from a Wikipedia article).
In some cases, a short sale is negotiated by the borrower and the creditor. In a short sale, the house is sold for less than the amount owed on the mortgage. The unpaid portion (the shares are then said to be “called for repayment”) may or may not become a personal debt, depending on the agreement reached with the creditor.
This option takes time, especially if several institutions manage your mortgage. All parties with an interest in the property must agree on the conditions of sale. The sale could therefore be cancelled at the last minute if one of the lenders disagrees.
Short selling VS. Input – What are your options?
While both options can have significant repercussions, a short sale will certainly have less impact on a homeowner’s credit report than a foreclosure. Indeed, a foreclosure could
cause a drop of 300 points or more in a homeowner’s credit rating.
A short sale, on the other hand, should not cause a loss of more than 100 points.
Borrowers who undergo a financial recovery usually find themselves unable to take out a new mortgage for the next 7 years. If circumstances are favourable and you short sell, you may be able to re-borrow immediately.
These days, people often find it hard to pay their mortgage every month. That’s normal. Choosing between a foreclosure and a short sale (or, yet another option,
selling your home fast in Montreal
) is an easy choice for a borrower struggling to make payments on time.
Sometimes, a creditor is open to negotiating with his borrower and agrees to a short sale in order to avoid having to pay fees and take the time required to foreclose on a property.
That’s why we suggest that everyone use this path:
- Talk to your creditor and see if they can help you manage your loan. If you encounter difficulties when communicating with your creditor, we can help you resolve the problem free of charge. Simply contact us via our contact page to discuss your situation.
- Try short selling or another program offered by your creditor. He or she may be able to cancel part of your debt or create a new contract with more affordable payments to help you get out of debt.
- If your bank refuses to cooperate, the best thing to do may be to sell your home. Do business with a home buying company like Vendre Maison Vite and
sell your home fast and for cash
. If you like, we can discuss the situation you’re in and make you an offer that meets your needs within 24 hours. Simply fill in our form by visiting our website>> - Accept input. The last option is to let the bank foreclose on your property. This is the worst-case scenario. This will have serious consequences for your credit rating. What’s more, you may still have a debt to repay to the bank even after your home has been foreclosed.
Now that you know what your options are, you may be able to avoid serious consequences for your credit rating. This way, you can buy a new home when your financial situation is more stable. Otherwise, a foreclosure will appear on your credit file and could make it impossible to buy a new home for the next 5 to 7 years. If you have the chance to sell short, it will certainly be more advantageous.
Are you threatened with foreclosure? We’d like to make a fair cash offer on your home.
