If Short Sale is one of the options you are exploring and the alternative is a Foreclosure, then you owe it to yourself to explore the impact of Short Sale on your credit along with other benefits of a Short Sale.
Short Sale of your home is one of the options available under water home owners to Avoid Foreclosure. For starters, when a home owner completes a successful short sale; there is minimal impact on credit score since the banks have the option to report the loan as “Closed” or “Satisfied”. Also, since Short Sales are now being approved in days as opposed to months, the impact of Missed Payments are minimized since the home owner could be missing 1 or 2 payments before the Short Sale is concluded.
In fact, if you participate in a HAFA Short Sale, your loan will be reported a “Paid in Full” according go to latest HAFA guidelines.
Some lenders are offering pre-approvals to owners ONE day after a successful Short Sale! So, Short Sale of your home does NOT mean an end to your ability to purchase another home . In fact, some home owners are strategically removing the bad Loans from their credit using Short Sale knowing full well that the odds of their underwater home recovering it’s full value are slim.
Alternatively, if you home is foreclosed the impact on your credit history will be severe and will last for at least 7 years. With a Foreclosure on your record, your credit card companies will also increase your interest rate to the maximum possible allowed by law. You will also have a tough time establishing new credit right after a foreclosure.
Given the popularity of Short Sales most lenders are now offering homeowners relocation assistance to expedite the the short sale listing, which means they will sometimes pay you to move. Contrast that with the harsh reality of a foreclosure process where you will be given a 2 week notice to move out. Short Sales Listing is a much more humane and elegant way to exist a difficult financial situation while minimizing the damage to your credit history.
Don’t expect that kind of treatment with a foreclosure proceeding. To see if you qualify for a Short Sale, feel free to contact us and get a Free Home Value Report.