Homeowners who are struggling financially, often have an important decision to make in terms of their home.

When faced with the possibility of their home going into foreclosure, most people could opt for a short sale as opposed to a loan modification.

What Is A Short Sale?

A short sale is if you have to sell your home for less than you currently owe your banker. In order for the sale to proceed you must get your lender to let you do a short sale. Naturally trying to convince a lender to take less than they are rightfully owed is not easy.

If you want to approach your lender with the thought of doing a short sale, you might have a better chance of getting them to agree to allow you to proceed if you tell them as soon as you realize you will not have the ability to make your monthly loan payments. The more repayments you are behind when you consult with the lender, the less likely they are to permit a short sale.

What Happens When A Home go Foreclosure?

Foreclosure comes about when you default on your mortgage loan. When you stop paying your loan after a certain amount of time your provider will begin the foreclosure procedure. It usually takes up to a year to complete. Once the process is complete you will be dispossessed and your home sold.

So Which Should You Consider? Short Sale vs Foreclosure

That will be based on your current condition. It may help to look at the positives and negatives of each. Usually this is determined after a mortgage loan modification was turned down.

A short sale will badly impact your credit rating. But depending on how you pay other bills, you can recover your credit rating within a fair amount of time. You won't have to worry about being taxed for the amount realized from the short sale, owing to the Mortgage Forgiveness Debt Relief Act 0f 2007.

A foreclosure, besides losing your home, severely damages your credit for several years. In the event you don't file either Chapter 7 or 13 to stop the foreclosure..your loan provider can get a judgement against you for all the unpaid mortgage you owe. They can also sue you for their own foreclosure costs.

If you should decide on proceeding with either a short sale or foreclosure, you should definitely have a professional to deal with the complexities involved with both.

If your lender concurs to allow a short sale you should use a respectable experienced real estate agent. He or she must have a substantial background in short sales. You want an agent who has handled short sales and he is familiar with the entire process.

With regard to foreclosure, consult an experienced bankruptcy attorney. If you're certain foreclosure is your only solution, you need to have a legal professional to represent and help you take the most beneficial options available for you and your position.

Clearly when you look at a short sale vs foreclosure, you can immediately notice that a short sale is a better option than a foreclosure.

However, a short sale is not that easy to get a lender to agree on. While foreclosure is more detrimental to our credit for a longer period of time, for many it is the only option they can consider.

If you can, a great solutions might be loan modifications.

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