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Foreclosures vs Short Sale



Short Sale vs. Foreclosure: How They Affect Your Credit?


There are an unlimited number of articles about short sales and foreclosures… and in spite of everything are you still on the fence as to what route you should take? For most distressed homeowners, the decision to either let your home foreclose or to attempt a short sale is not an easy one. This information is intended to help clarify the issue.

I'm certain you have heard that in most cases the short sale process is a lengthy one. The short sale path is less damaging than a foreclosure is to you in the long run. Why? You know how crucial your credit score is, especially now a days. Actually, short sales are not as damaging as foreclosures are on your credit score. A foreclosure on your record can reduce your credit score anywhere from 250 to more than 300 points and typically affects that credit score for 2-3 years. On the other hand, if the homeowner has late payments on the mortgage only and no other payments are late, short sales may only lower a credit score as little as 50 points and usually affect the credit score for as short as a 12-18 months.

Also, were you aware that you could possibly be overlooked for a job position or not hired for a new job because you have a foreclosure on your credit score? Sounds crazy, but it could happen. Another benefit on the short sale side is that a short sale is not reported on a credit report. A short sale is usually reported as "paid in full" or "settled". Therefore, you would not have to worry about losing your job or future employment opportunities.

Consider this…

1. Any homeowner who loses a home to foreclosure is ineligible for a Fannie Mae-backed mortgage for a period of 5 years. Any homeowner who successfully negotiates and closes a short sale will be eligible for a Fannie Mae-backed mortgage after only 2 years or less in some cases.

2. If you try to get a loan with ANY Mortgage Company after a foreclosure, you would have to disclose the previous foreclosure and the rates will be affected tremendously! On the other hand, Short Sales do not have to be disclosed and would not have any negative influence on your rates for any future mortgage.
As you can see it is far better for a distressed homeowner to pursue a Short Sale over a Foreclosure.

For further information, contact:

Luigui Corral
847-215-5555
Remaxu.com

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