This is very good info for all to see. Always be careful when buying either one...
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If you are a homeowner having trouble making your mortgage payments, you may have considered doing a short sale or letting the home go into foreclosure. You must understand the difference between the two so that you can make the best decisions for your future.
A short sale of real estate happens when the sale proceeds fall short of the balance owed on the property's loan(s). If a homeowner can't make the monthly payments and the house can't be sold for the amount of the loan(s) and other liens, then the lender may agree that selling the property at a loss is better than foreclosing on the loan. A lender may agree to a short sale if the homeowner can show financial hardship such as job loss, high debt from medical bills or business loss, or other financial difficulties that a homeowner will not be able to overcome.
A foreclosure is a legal process in which a lender or other lien holder seeks to take back a property if the homeowner stops making the payments or hasn't met other commitments, like paying real estate taxes or homeowner association fees.
Illinois is a "judicial foreclosure" state. This means that the lender or other lien holder files a lawsuit to show that the borrower has missed payments. If the homeowner doesn't make up the amount owed in a specific period of time, the lender may ask the court to allow that the property be sold at auction to pay off the debt. In Illinois the County Sheriff conducts an auction in which anyone can purchase the home to pay off the debts. Usually, though, the only "bidder" is the lender who owns the mortgage. The lender takes back the property and after a series of other legal steps is allowed to sell the home to pay off the mortgage.
Other options for distressed homeowners are loan modification programs or deed-in-lieu of foreclosure.
Know your options: consult your lender, a real estate attorney, a government-sponsored counselor, a tax professional and a real estate broker experienced with short sales.
This post was written by Leslie Ebersole and originally published on FoxValleyRealEstate. Use or reproduction without express consent of the author is prohibited