Short Sale vs. Foreclosure
BENEFITS OF A SHORT SALE VS. FORECLOSURE
To help understand some of the consequences of a foreclosure, please read below.
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Short Sale |
Foreclosure |
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Credit Score |
A short sale itself will minimally affect your credit score, usually around 50 points. Late payments usually have the largest negative impact on your credit score from a short sale and can average 30 points or more each. | Your credit score could be lowered 300+ points and will stay on your record for 10 years! |
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Credit History |
There is not a credit reporting item for a short sale. Upon sale, your mortgage company will typically report the short sale as “Settled in full,” or “Paid as Negotiated” on your report. | A foreclosure will remain on your credit for 10 years and is in your county’s permanent public records. |
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Current |
A short sale will NOT affect your employment because it is not an actual item on your credit report. | Your employer has the right and many times will actively check your credit if you are in sensitive positions. Sometimes a foreclosure is grounds for immediate re-assignment or termination. |
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Future |
A short sale is not an actual item on your credit report and typically will NOT affect future employment. | Many employers will check potential employees’ credit history before manking a hiring decision. A foreclosure is one of the worst items you can have on your credit and may affect future employment. |
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Future Loan |
You are not required to disclose that you have previously performed a short sale to future mortgage companies. | On the federally mandated standard loan application form 1003 you will be required to answer ‘YES’ to the question ‘Have you had property foreclosed upon or given title or deed in lieu thereof in the past 7 years?’ Answering ‘yes’ affects the interest rate you will receive. |
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Future Fannie Mae |
After a successful short sale you may be eligible to qualify for a Fannie Mae backed loan after only 2 years. | After a foreclosure you will be ineligible for a Fannie Mae backed loan for at least 5 years. |
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Future Fannie |
After a successful short sale you may be eligible for a Fannie Mae backed loan after only 2 years on non-primary residences. | After a foreclosure you will be ineligible for a Fannie Mae backed investment loan for a minimum of 7 years. |
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Deficiency |
Generally, the lender forgeits the right to pursue a deficiency judgment against the borrowers. This is stated in approval letters. In many states it’s actually illegal to pursue judgment. | The bank has the right to pursue the deficiency judgment on all foreclosured properties (except in states where there is no deficiency). |
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Deficiency |
A short sale home is sold at or near market value and in most cases is sold for more than a foreclosure would, resulting in a lower deficiency which will cut your lender’s loss. | If the home does not sale at a foreclosure auction it must go through the bank REO system. This will result in a longer selling process and potentially a higher deficiency judgment for the homeowner. |
Seeing the benefits of a short sale compared to a foreclosure really puts things into perspective! For more information on short sales, give us a call or visit our website.
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www.Short-Sale-Specialists.com
877-737-4903
Are you looking for a Hartford short sale Realtor? Look no further! Our stop Connecticut foreclosure specialists provide FREE short sale expert services to Hartford homeowners in hardship. Call today to see if you qualify for a short sale! Need a Hartford CT Certified Distressed Property Expert in short sales to offer free Chase short sale services? Our Hartford area Certified Distressed Property Expert real estate agents are here to help, and are Certified or training in the Connecticut Home Affordable Foreclosure Alternatives, or HAFA Government short sale program.
Our organization does not directly offer short sale or foreclosure rescue services in the state of Connecticut.
Copyright First Coast Realty Associates 2011-Sharon Molnar
