Short Sale vs. Foreclosure in Boise–What’s the Difference?

Short Sale vs. Foreclosure in Boise

Whether you’re a buyer or a borrower / seller, a short sale and foreclosure each come with their own set of advantages and challenges.

What Is A Foreclosure In Boise, Idaho?

Simply put… “A foreclosed home is one where the owner can no longer make mortgage payments and the bank has taken back the property” (source).  If you stop making your mortgage payments… your lender has the legal right to foreclose on your home in order to recover the money they lent you. 

A home typically enters foreclosure when a borrower stops making mortgage payments. The lender then assumes ownership of the property and evicts the borrower. These homes are sold at auction or through more traditional channels using real estate agents. A foreclosure can seriously damage a borrower’s credit rating, making it very difficult to qualify for a new mortgage for many years to come.

The foreclosure process can vary depending on the state you live in. For more details, visit the foreclosure process information provided by the HUD Government website.

Not in the Boise area? No problem. With 17+ years serving Idaho homeowners, we buy houses in Twin Falls, Jerome, Mountain Home, Gooding, Nampa, Caldwell and more. Reach out to see how we can help you today.

What Is A Short Sale?

In a short sale, the home remains owned by the borrower.

A short sale is defined as… “A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property, and the property owner cannot afford to repay the liens’ full amounts and where the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt” (source: Wikipedia)

In some situations, a short sale is a mutually agreed-upon solution between borrowers and lenders. The home is sold for less than the remaining mortgage balance. The unpaid portion — known as the deficiency — may or may not still be owed by the borrower, depending on the agreement reached.

This process can take considerable time, especially when multiple lending institutions hold a stake in the mortgage. Every party involved must agree to the sale terms, and a deal can fall apart if even one lender refuses to sign off.

Short Sale vs. Foreclosure – Your Options

While both options carry consequences, a short sale typically has a smaller impact on a borrower’s credit. A foreclosure could drop a borrower’s credit score by 300 points or more, while a short sale may only reduce the credit score by around 100 points.

Borrowers who go through foreclosure are often unable to purchase another home for 5–7 years using a traditional mortgage, whereas in certain circumstances, a short sale borrower may be able to purchase again almost immediately.

As many Idaho homeowners continue to feel financial pressure, keeping up with monthly mortgage payments can be a real struggle. Choosing between foreclosure and a short sale — or a 3rd option… selling your Boise house fast — is an important decision for any borrower facing hardship.

In many cases, lenders are open to working with borrowers on a short sale to avoid the time-consuming and costly foreclosure process.

Here’s what we always recommend.

1. Talk with your lender and explore options for modifying or restructuring your loan. We can also help point you in the right direction if you’re having trouble navigating conversations with your lender — just visit our Contact page and we’ll review your situation together.
2. Pursue a short sale or another lender program that may forgive a portion of your loan, restructure your payments into something more manageable, or help you regain your financial footing.
3. If your lender isn’t willing to work with you… your best move may be to sell your home. Partner with a trusted local buyer like Idaho House Buyer to sell your house fast for a fair all-cash offer. We’ll review your situation and present you with a no-obligation offer within 24 hours. Fill out the form on our website to get started >>
4. Foreclosure. The last resort is allowing the home to fall into foreclosure. This is the worst outcome possible. It will severely damage your credit, and you may still owe money to the bank even after the process is complete.

Understanding your options puts you in a much stronger position to protect your credit score and keep the door open to homeownership in the future. A foreclosure on your record can make that nearly impossible for 5–7 years, so if you have the opportunity, a short sale is often the smarter path forward.

Facing a pending foreclosure?  We’re ready to make you a fair, all-cash offer on your Idaho home.

Not in the Boise area? No problem. With over 17 years of local experience, we buy houses in Twin Falls, Jerome, Mountain Home, Gooding, Nampa, Caldwell and more. Reach out to see how we can help you today.