Benefits of a Short Sale Versus a Foreclosure
By: Jamie Thompson
Posted: December 7, 2009
As unfortunate as it is to miss the first mortgage payment and to realize that the ability to meet and fulfill the commitment to make future mortgage payments is not realistic, there are still benefits to being responsible as you exit a terrible situation. For a seller, navigating the short sale promises many benefits over just locking the doors and turning the home over to the bank. Here are a few… · A seller whose home is in foreclosure is ineligible for a Fannie Mae backed mortgage for 5 years but if the seller closes a short sale on the same home the seller will be eligible for a Fannie Mae backed mortgage after 2 years. · An investor whose home is foreclosed upon is ineligible for a Fannie Mae backed mortgage for 7 years, but if the seller closes a short sale on the same home they will be eligible for a Fannie Mae backed mortgage after 2 years. · Credit scores for the foreclosed homeowner will drop 250 to 300 points and typically affect credit scores for 3 years, while short sale homeowner could see a drop in credit score of as little as 50 points and typically affect the credit score for 18 months or less. · A foreclosure remains as public record on a credit history for 10 years or more while a short sale is generally not reported on credit history. One thing that is very important for the homeowner to remember: The bank does not want your home and does not want to foreclose on your home. The cost for the bank to negotiate the liens on a property is less expensive than proceeding with a trustee sale, and selling the property after taking ownership of the property. While navigating the short sale process is many times a headache for the current homeowner, the homeowner is still in control of the situation and is able to influence the outcome and make decisions that are in one’s own best interests. Do you or someone you know face a foreclosure? The short sale process could seem like an embarrassing difficult process. You have options to sell your
