Anaheim , Ca Short Sale vs. Foreclosure: 5 Reasons to Choose a Short Sale over a Foreclosure.
Falling behind on mortgage payments is an unpleasant feeling but doing nothing about it and ending up losing your home to Foreclosure is not the best solution. Here are the top reasons why a short sale can help you and your family.
- Your future home purchasing power: Just because things are bad now doesn't mean they will be this way forever. If a short sale is successfully negotiated, a homeowner can qualify for a Fannie Mae home loan in as little as 2 years.
On the other hand, a homeowner with a foreclosure on their record will be ineligible for a Fannie Mae home loan for 5 years on a primary residence and 7 years for the purchase of a second home or investment property. For non Fannie Mae loans, a home buyer with a previous foreclosure on their record must disclose this fact in a Mortgage applications for 7 years which will affect their ability to qualify and also affect interest rates.
2. Credit Score: After a short salea credit score will be damaged by as little as 50 points. In most cases only mortgage lates will be reported and the mortgage account will be labeled as a settled, paid, or negotiated. Credit will start to improve in as little as 12-18 months.
In a foreclosure, a persons score is usually lowered 200-300 points. This will typically affect the score for at least 3 years.
Credit History: A short sale does not appear on a person's credit. Instead the mortgage account will be reported as paid in full, settled, or paid as negotiated. On the other hand, A foreclosure will remain on a credit report for 10 years or more.
3.Employment: An employer has the right to check your credit for those employees who hold sensitive positions. Future employers sometimes also check credit when deciding on candidates. Since a short sale is not reported it does not create a challenge for employment. It also does not affect security clearances.
A foreclosure can effect employment in particular sensitive positions and security clearances. On top of this, when applying for a new job, a foreclosure is one of the most detrimental credit items an applicant can have.
4. Time in Your Home: During short sale negotiations a homeowner will typically remain in their home. Since banks are overwhelmed with files and do not have enough personal to handle all of the short sales that come in, a typical short sale negotiation will take between 60-180 days. While the short sale is being looked at, the lender will typically postpone foreclosure proceedings or suspend them all together. This can buy your family valuable time in your home.
In California, a typical foreclosure takes about 6 months from time of first missed payment until Foreclosure Trustee sale. Knowing that your home will soon belong to the bank can be stressful and can feel like things are out of your control.
5. why choose a Short Sale Vs. A Foreclosure? Here is a great reason... A short sale is FREE! Typically all commissions and sales costs are paid by your lender. Sadly, 70% of homeowners in Orange, Ca and across the United States go through a foreclosure without this knowledge and subsequently lose their home without seeking help.
***BONUS **** A foreclosure can cause embarrassment for you and your family. After a home goes to Foreclosure, the bank will likely post notices on your home. You will also get a knock on your door from a bank representative asking you to leave once the foreclosure goes through. This can be especially hard on children and teenagers. Once you are out of the home, the lender's Realtor will likely market the home as a bank owned property which let's the neighbors know of your troubles. Believe it or not, with all the emotional turmoil that happens with a foreclosure, this is the one that frightens many homeowners the most.
In a Short Sale, the home will be marketed like any other sale. As far as neighbors, family, children, or friends are concerned, it is nothing out of the ordinary. You also have more control as you are the seller and not the bank. It is also thought to be a more ethical thing to do as you are looking for a solution instead of ignoring a problem. Everyone wins: The bank saves money as there are no expensive foreclosure fees, you save your credit and dignity, and the neighborhood does not suffer value loss due to another foreclosure on the street.
Don't spend more time than you need to carrying the burden of your current financial stress the winner between short sale vs. foreclosure is obvious. If putting your life back on track is your goal, then please give me a call. You have many options. Find out if a Short Sale is right for you.
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