Homeowners who are facing a Pasadena foreclosure often wonder if the foreclosure process is better or if a Pasadena short sale is better. With the number of Pasadena foreclosures increasing each month more homeowners have to ask themselves this difficult question. Unfortunately, there is no right or wrong answer to which one is better. The answer to the question depends mainly upon your own personal circumstances, such as financial situations, market conditions, personal goals, along with many others. Before making the decision on what is best for your situation it is helpful to consider t
Image via Wikipediahe advantages and disadvantages of both options.
Definition of Pasadena foreclosure
Foreclosure is the process that your lender goes through to take ownership of your property if you have defaulted on your loan. The legal process, if followed correctly, allows the lender to sell your property to satisfy the debt that is currently owed.
Definition of Pasadena short sale
A Pasadena short sale is when your mortgage lender agrees to accept a lower amount for the payoff than what is originally owned. Getting your mortgage lender’s approval is only the first step in a short sale, for more detailed information contact your local Pasadena Realtor.
How Pasadena short sales and Foreclosures Affect Credit
Some people think that a Pasadena short sale looks better on your credit report than a Pasadena foreclosure does, but both negatively affect your credit in the same way. Short sales and Pasadena foreclosures stay on your credit report for a period of seven years, according to www.myfico.com. Your FICO score can start to improve after two years, but all of your other accounts must be kept in good standing for your credit score to improve. How you plan to use your credit in the future will help you decide which method to choose. If you plan to purchase a new home a short sale is going to look better on your credit. Under Fannie Mae Guidelines for a new mortgage with a short sale you only have to wait two years, while with a Pasadena foreclosure you have to wait five years to show that you have reestablished your credit.
Cancellation of Debt
Both Pasadena short sales and Pasadena foreclosures will involve the cancellation of debt, which can affect your taxable income. With a foreclosure your taxable income can increase, unless the reason for foreclosure is due to bankruptcy, insolvency, the loan is for your primary residence or even a loan for improving your primary residency. In other cases your taxable income increases based on the loan balance minus the property’s fair market value at the time of the Pasadena foreclosure. With a short sale the same exceptions apply, but the increase in taxable income is figured differently. To determine the cancellation of debt income you take the loan balance and subtract the sales price.
Capital Gains
Both the Pasadena foreclosure and short sale process can involve capital gains taxes, but that depends on the situation. With foreclosures how much you might owe in capital gains is determined by taking the fair market value of the property and subtracting out the original purchase price and the cost of any major improvements. Any positive amount left over is considered a capital gain and must be added to your taxable income. The Pasadena short sale process determines capital gains by taking the selling price and subtracting out the original price you paid and the cost of any major improvements. Neither Pasadena foreclosures nor short sales require you to pay capital gains taxes on up to $250,000 or $500,000 if married filing jointly, but you must have owned the property and used it as your primary residence for the past two out of five years.
Personal Liability
Personal liability is something to think about when deciding which option works best. With a Pasadena foreclosure if your loan balance is higher than what the lender is able to sell your property for you are generally not responsible for the difference. If the property is listed as owner occupied or your lender forecloses non-judicially you usually don’t owe the difference, but if you intentionally damage the home, are guilty of loan fraud, or have a FHA or VA loan. With a Pasadena short sale whether you are personal responsible for the difference between what you originally owed and how much you sell the property for will depend on what you work out with your mortgage lender. If your lender agrees to forgive you for the amount owed you will want to make sure you get the agreement in writing.
Possession of the Property
How long you can stay in the house will depend on which option you choose. The foreclosure process usually takes about five months to complete, so by law you can stay in your home during the entire Pasadena foreclosure process. After the trustee’s sale you are supposed to leave the home, but if you choose to stay the new owners have options they can take against you. One option is offering you’re a set amount of cash for you to hand over the keys, but this option is seldom exercised. The most common option used is an eviction, which if done right means you only have three days to leave the property. With a Pasadena short sale you have the right to stay in your home until they new owners close on the loan. You can also arrange for longer or shorter terms with the new owners before escrow.
Other Concerns:
Even though the Pasadena foreclosure process requires less effort on your art than a short sale does, it is more emotionally draining than a short sale. One of the hardest things about going through the foreclosure process is you never know for sure how long things will take, so you don’t know if it will be faster than the average five months or longer. The not knowing can be harder because you are in limbo waiting for something to happen. Aside from this some people feel ashamed of having to go through a foreclosure, which is made worse by being escorted off the property by the police. Pasadena short sales require a lot more work on your part, but having a competent Real Estate agent can make the process easier on you. The biggest stress associated with a short sale is you don’t know if the sale will go through or not until the last minute. Despite the uncertainty a short sale allows you to take action, so you can move forward with your life as soon as possible.
Assistance
Pasadena foreclosure consultants are available to help you throughout the process, but they must be registered with the California Department of Justice, according to Cal. Civ. Code § 2945.45, they must also be bonded for a minimum of $100,000. The only ones exempt from these requirements are Real Estate licensees, so make sure you call the California Attorney General’s Office to verify their information. With the Pasadena short sale you can simply hire a Real Estate agent who is familiar with the process to help walk you through it. To ensure that they have a Real Estate license visit http://www2.dre.ca.gov/PublicASP/pplinfo.asp
Image via Wikipediahe advantages and disadvantages of both options.Definition of Pasadena foreclosure
Foreclosure is the process that your lender goes through to take ownership of your property if you have defaulted on your loan. The legal process, if followed correctly, allows the lender to sell your property to satisfy the debt that is currently owed.
Definition of Pasadena short sale
A Pasadena short sale is when your mortgage lender agrees to accept a lower amount for the payoff than what is originally owned. Getting your mortgage lender’s approval is only the first step in a short sale, for more detailed information contact your local Pasadena Realtor.
How Pasadena short sales and Foreclosures Affect Credit
Some people think that a Pasadena short sale looks better on your credit report than a Pasadena foreclosure does, but both negatively affect your credit in the same way. Short sales and Pasadena foreclosures stay on your credit report for a period of seven years, according to www.myfico.com. Your FICO score can start to improve after two years, but all of your other accounts must be kept in good standing for your credit score to improve. How you plan to use your credit in the future will help you decide which method to choose. If you plan to purchase a new home a short sale is going to look better on your credit. Under Fannie Mae Guidelines for a new mortgage with a short sale you only have to wait two years, while with a Pasadena foreclosure you have to wait five years to show that you have reestablished your credit.
Cancellation of Debt
Both Pasadena short sales and Pasadena foreclosures will involve the cancellation of debt, which can affect your taxable income. With a foreclosure your taxable income can increase, unless the reason for foreclosure is due to bankruptcy, insolvency, the loan is for your primary residence or even a loan for improving your primary residency. In other cases your taxable income increases based on the loan balance minus the property’s fair market value at the time of the Pasadena foreclosure. With a short sale the same exceptions apply, but the increase in taxable income is figured differently. To determine the cancellation of debt income you take the loan balance and subtract the sales price.
Capital Gains
Both the Pasadena foreclosure and short sale process can involve capital gains taxes, but that depends on the situation. With foreclosures how much you might owe in capital gains is determined by taking the fair market value of the property and subtracting out the original purchase price and the cost of any major improvements. Any positive amount left over is considered a capital gain and must be added to your taxable income. The Pasadena short sale process determines capital gains by taking the selling price and subtracting out the original price you paid and the cost of any major improvements. Neither Pasadena foreclosures nor short sales require you to pay capital gains taxes on up to $250,000 or $500,000 if married filing jointly, but you must have owned the property and used it as your primary residence for the past two out of five years.
Personal Liability
Personal liability is something to think about when deciding which option works best. With a Pasadena foreclosure if your loan balance is higher than what the lender is able to sell your property for you are generally not responsible for the difference. If the property is listed as owner occupied or your lender forecloses non-judicially you usually don’t owe the difference, but if you intentionally damage the home, are guilty of loan fraud, or have a FHA or VA loan. With a Pasadena short sale whether you are personal responsible for the difference between what you originally owed and how much you sell the property for will depend on what you work out with your mortgage lender. If your lender agrees to forgive you for the amount owed you will want to make sure you get the agreement in writing.
Possession of the Property
How long you can stay in the house will depend on which option you choose. The foreclosure process usually takes about five months to complete, so by law you can stay in your home during the entire Pasadena foreclosure process. After the trustee’s sale you are supposed to leave the home, but if you choose to stay the new owners have options they can take against you. One option is offering you’re a set amount of cash for you to hand over the keys, but this option is seldom exercised. The most common option used is an eviction, which if done right means you only have three days to leave the property. With a Pasadena short sale you have the right to stay in your home until they new owners close on the loan. You can also arrange for longer or shorter terms with the new owners before escrow.
Other Concerns:
Even though the Pasadena foreclosure process requires less effort on your art than a short sale does, it is more emotionally draining than a short sale. One of the hardest things about going through the foreclosure process is you never know for sure how long things will take, so you don’t know if it will be faster than the average five months or longer. The not knowing can be harder because you are in limbo waiting for something to happen. Aside from this some people feel ashamed of having to go through a foreclosure, which is made worse by being escorted off the property by the police. Pasadena short sales require a lot more work on your part, but having a competent Real Estate agent can make the process easier on you. The biggest stress associated with a short sale is you don’t know if the sale will go through or not until the last minute. Despite the uncertainty a short sale allows you to take action, so you can move forward with your life as soon as possible.
Assistance
Pasadena foreclosure consultants are available to help you throughout the process, but they must be registered with the California Department of Justice, according to Cal. Civ. Code § 2945.45, they must also be bonded for a minimum of $100,000. The only ones exempt from these requirements are Real Estate licensees, so make sure you call the California Attorney General’s Office to verify their information. With the Pasadena short sale you can simply hire a Real Estate agent who is familiar with the process to help walk you through it. To ensure that they have a Real Estate license visit http://www2.dre.ca.gov/PublicASP/pplinfo.asp
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