Here is an summary of the consequences of foreclosure, deed in lieu and short sale:
BUYING A HOUSE: A homeowner who loses a home to Foreclosure is inelegible for a Fannie Mae backed mortgage for a period of 5 years. A homeowner who successfully negotiates and closes a short sale will be elegible for a Fannie Mae backed mortgage after only 2 years.
INVESTOR: An investor who allows a property to go to Foreclosure is ineligible for a Fannie Mae backed investment mortgage for a period of 7 years. An investor who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed investment mortgage after only 2 years.
APPLYING FOR A LOAN: On any future 1003 application, a prospective borrower will have to answer YES to question C in Section VIII of the standard 1003 taht asks "Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years? This will affect future rates. There is no similar declaration or question regarding a short sale.
CREDIT SCORE: Credit Score after Foreclosure may be lowered anywhere from 250 to over 300 points. Typically this will affect score for over 3 years. Only late payments on mortgage will show and after sale mortgage will be reported as paid or negotiated. This will lower the score as little as 50 points if all other payments are being made. A short sales affect can be as brief as 12 to 18 months.
FORECLOSURE VS. SHORT SALE: Foreclosure will remain as a public record on a person's credit history for 10 years or more. Short sale is not reported on a credit history. There is no specific reporting item for 'short sale'. The loan is typically reported 'paid in full, settled'.
If you're behind on your mortgage payments, call us. We can help you decide to what to do. You may be able to negotiatiate loan modification, refinancing your loan or processing a short sale. Whatever you do, don't ignore the problem. We can help but the process takes some time. Call Jerri 706-296-4395.
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