Phoenix homeowners who have found themselves unable to pay their mortgage is going to hear from their lender. Once a homeowner is far enough behind they will need to explore their options for selling the home or they are going to lose it. The two ways homeowners may handle falling behind are through Phoenix short sales or going through a foreclosure.
Many Phoenix homeowners find themselves unable to pay on a home and unable to sell the home because they owe more than the house is currently worth on the market. When there is a market crash or the market has drastically dropped, there are homeowners that own homes that are worth significantly less than their mortgage.
When considering Phoenix short sales to sell the property, homeowners have to ask the bank to approve the sale. In this type of sale, the bank would be agreeing to take less than the mortgage value if the homeowner sells while forgiving the rest of the mortgage to allow the homeowner to walk away from the Phoenix property.
Phoenix short sales are like any other sales after the bank has approved it. Most homeowners choose a real estate agent that has worked with Phoenix short sales previously to list their home. Buying a short sale can take more time and there will be more documents to go through, but it is similar to purchasing any other property.
Most Phoenix short sales take so long because the lender has a hand in agreeing to the terms of an offer. The lender wants the buyer to take on the responsibility for any problems in the home and they must pay the costs of closing. These are costs that sellers usually have a hand in paying but are ultimately left up to the buyer.
The Phoenix foreclosure process starts after a homeowner has failed to pay their monthly mortgage payments for a long period of time. Usually, this has to be more to three months while some lenders even wait up to six months before starting the process. Once this time threshold has been passed the lender will send a notice to the homeowner to let them know they will be starting the process.
With this letter being sent out, a lender still has not officially started the Phoenix foreclosure process. The homeowner is now in pre-foreclosure and they still have a chance to talk to the lender. At this point, homeowners can choose to pay what they owe, attempt a short sale, or work out a payment plan with the lender if the lender will agree. Pre-foreclosure can be as short as a month and as long as four months.
If the homeowner fails to talk to the lender and set up an alternative plan they will enter foreclosure. At this point, the lender will hold an auction in which the home will be sold. There are many ways that foreclosures are advertised and investors like to bid on these properties to try to get a home for under market price.
Both a foreclosure and a short sale is an option for a Phoenix homeowner that is unable to pay for their mortgage. The consequences and benefits of each option are different even though in the end the owner ends up with a similar result – the loss of their home.
Phoenix short sales allow the homeowner to sell the home and make a deal with the lender to walk away from any cost that the sale does not cover for the mortgage. Meanwhile a foreclosure is when a lender takes possession of the home and sells it themselves.
The main difference is the impact that each process has on the homeowner’s credit. A foreclosure is the worse option by far. It will damage a person’s credit much more than a short sale. It also stops them from being able to purchase another home for five years while remaining on their credit for seven years.
When a Phoenix homeowner knows they are falling behind on their mortgage the best thing to do is contact the lender. Lenders do not want to take possession of homes; they want their borrowers to pay back the money owed to them. If a homeowner does not talk with their lender until it is too late they will need to get a short sale approved or wait until the foreclosure process is complete.
If you are struggling with your home payments, we can help. Our team specializes in working with distressed Phoenix homeowners. We can make you a cash offer on your home and help you get out from under your home. Contact us today to see how we can help.