Short Sale vs. Foreclosure to Sell Your Home in Essex Maryland

Which is Better? A Foreclosure or Short Sale of Your Essex MD House?

Sometimes, homeowners may find themselves in difficult financial situations. For a homeowner, this may mean losing their most valuable investment: your home in Maryland.


If they are unable to make mortgage and insurance payments, you may have to decide between a short sale and foreclosure of your house. 

4 Stages of Foreclosure in Maryland

In most cases, the foreclosure process will not begin until you have missed at least three payments.
Below are the four stages that can be involved in the foreclosure. You may or may not decide to attempt a short sale but it is included below.
    • The first stage is called pre-foreclosure. This occurs when a borrower is behind on their mortgage payments and the lender has issued a notice of default.
    • The second stage is a short sale. This is when a homeowner may try to sell their house before the bank foreclosures. It is called a short sale because the market value of the home is below what is still owned on the mortgage. In order to have a successful short sale process, the bank must agree to the short sale.The benefit of short sale is that it has less of a negative impact on your credit score than foreclosure.

    • The third stage is the foreclosure auction. This happens when the mortgage lender attempts to sell your home in order to collect as much of the outstanding debt as possible as quickly as possible

    • The fourth step is an REO, which stands for “Real Estate Owned”. If the property does not sell at auction, the lender may repossesses the property and place it on the market for sale in an attempt to collect the amount owed on the loan.
Based on the process outlined above, “foreclosure” is the bank taking title or “possession” of your house in Essex Maryland.

Short sales and foreclosures have lasting impact your credit score.

These also show up in any credit reports that are pulled in the future for several years. Landlords and banks use your credit score to determine whether they will offer you an apartment to rent or a loan for a home or car.

Foreclosures stay on your credit for at least 7 years before they can be removed, sometimes even up to 10 years.

The statutory redemption period is the time frame in which you are allowed to stay in your home after it has gone into foreclosure. This time frame varies depending on how you took title of the property, via mortgage or deed of trust. If you have a mortgage, the process may only take 30 days or the process may take up to 2 years.

If you haven’t reinstated your loan by the end of the redemption period and still can’t make payments, you’ll have to move out. If you took title through a deed of trust, there’s usually no statutory redemption period, so you’ll have to move out right away.

Is a Short Sale Right for You?

During the foreclosure process as described above, you have the opportunity to list your Essex house as a short sale.


The best time for a short sale is when you realize you cannot make your payments, before the lender files legal action and officially owns your house.


You will be able to put your house up for sale and try to receive an offer that will cover the remainder of your loan or come very close to it.


This might be a difficult process because you will have to be in constant communication with the lender about the offers you receive and will have to wait for them to approve or make a counteroffer to those offers.

If you do have an offer that the bank is willing to accept, selling your Essex house to that buyer would relieve you of some of the credit damage of having a foreclosure, although it would still negatively affect your credit.
The best option would be to avoid the foreclosure process altogether and negotiate a sale of your property before you get to the point of missing payments on your loan.

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