Sewell foreclosures and pre-foreclosures are a sad fact of life. The truth of the matter is that, for many, even loan modification isn't an option. When faced with the choice of foreclosure or short sale, how do you decide which is best? While short sales have been pushed by many as a viable option, it's hard to know what's best for you. Here are some facts about the consequences of both:
Your Credit
While both Sewell foreclosures and short sales will affect your credit score, the differences are wide. A foreclosure can affect your score for as long as three years or more, and lower it as much as 300 points. The foreclosure can remain on your public history for over ten years.
However, only late payments show on your credit with a short sale. Your score can drop as little as 50 points (although it could be as much as 200 points) and be affected for as short as one year. In addition, it isn't reported on your history; it will show that the mortgage was settled and paid in full.
Your Job
On its own, a short sale generally doesn't affect your employment. However, a foreclosure is a different story. Some employers regularly check their employees' credit records. As well, many require credit checks for new hires. A foreclosure on your record can jeopardize your current position or future opportunities, as well as cause the revocation of a security clearance.
Judgments
In the event of a foreclosure, many banks have the right to try and get a deficiency judgment, stating that you have failed to pay the entire amount of the mortgage. With short sales, however, lenders will normally agree to give up the right to that judgment and you should make sure that they put it in writing.
Lastly, keep in mind that Sewell foreclosures generally close below the price they would get from a short sale, so the remaining balance might be significantly higher with a foreclosure.
If you want to stay out of foreclosure through a short sale, I can help. Call me at 856-308-5989 or email me at kim@kimcanhelp.com for more information.
Kimberly Thomas, Broker-Salesperson
Helpful links for research on foreclosures:
1. Loan modification
http://www.hud.gov/offices/hsg/sfh/nsc/faqlm.cfm
2. Credit checks for new hires
http://www.privacyrights.org/fs/fs16-bck.htm
3. Deficiency judgment
http://www.foreclosurefish.com/blog/index.php?id=412
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