Short Sales and Foreclosures are two choices you have when it comes to dealing with your underwater mortgage. However, one option has much less negative impact on your credit that the other. In fact, Short Sale are one of the simpliest options to Avoid Foreclosure without resorting to bankruptcy or deed-in-lieu.
There are many benefits to doing a short sale compared to a foreclosed. For starters, when you go through a successful short sale; there is minimal impact on your credit specially if you had no late payments reported on your credit history. And Short Sales are now being approved within days as opposed to months it used to take in 2012 to get a Short Sale approved.
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. We have lenders who will pre-approve a Short Sale owner ONE day after a successful close of a Short Sale Listing. This means that you can strategically remove yourself from an upside down home to a one you can afford and continue to build equity.
However, if your home is foreclosed the impact on your credit history will be severe and will last for at least 7 years. And foreclosures are much more disruptive since homeowners are typically in the dark about the lender’s calender to send their home to a Foreclosure auction.
Another advantage of Short Sales is the Relocation Assistance funds that being offered to homeowner to help them with the transition. 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.
Contact Us if you have questions about your options.