Short Sale vs. Foreclosure in Illinois

It's simple. The difference between a short sale and a foreclosure is substantial. At the conclusion of a well executed short sale, you will be allowed to walk away from the home, without owing the difference between the original loan amount and the current market value of the home. If you qualify for Home affordable Foreclosure Alternetive (HAFA) Program you may receive $3,000 relocation assistance. Additionally, banks typically report to all three credit reporting agencies that your account has been "legally settled short of full payment." A short sale shows responsibility on your credit because you made a choice to cooperate with the lender, versus abandoning the property and allowing the home to foreclose. After the completion of a successful short sale, you may be able to purchase another home in as little as one year, compared to a foreclosure or a bankruptcy which can have a negative impact on your credit for 7-10 years.

Short Sale is just like any other sale, you list you property with Real Estate Agent who has appropriate training and experience in Short Sales. Next you accept offer on your home and your Real Estate Agent handles the negotiation with the mortgage company. Once lender accepts the offer your attorney sets up closing and you move out and new family move in. Where as in foreclosure at the end of the court process you are evicted and your house is boarded up. In as Short Sale many sellers claim that they have saved their dignity as they have come to mutual agreement with the bank.

The situation is very similar to a property owner who has equity in their home. For example if you had $100,000 equity and you have lost you job, you most likely would decide to sell your home and in future by another when the situation improves. You would most definitely not stop making mortgage payments and let the bank foreclose on your home.