Short Sale Benefits...
- You are in control of the sale, not the bank.
- You may sleep better at night knowing who is buying your home (?).
- You will spare yourself the social stigma of the "F" word, foreclosure.
- You can be totally current on your payments, and still effect a short sale (VERY SMART).
- Your home sale will be handled like any other home sale, with you calling the shots, showings, etc.
Buying Again After a Short Sale Is Easier...
If you've never been more than 30 days late on a payment, and the lender does not require that you pay back the loan, Fannie Mae guidelines may allow you to buy another home immediately after a short-sale. That's a good thing.
However, finding a lender who will fund that kind of loan is pretty difficult. If you are current on your mortgage, you can qualify for an FHA Loan immediately as well, but lender requirements can be really strange, such as you have to move more than 600 miles away - why that is, I have no idea.
If your payments are in arrears, yet a short sale is granted by your lender, you may qualify to buy another home with a Fannie-Mae backed mortgage within two years, regardless of whether the home is your primary residence. The wait for FHA is 3 years.
Some Affects On Credit After a Short Sale...
A short sale is the lesser of the two derogatory marks (vs. Foreclosure), on your credit. Credit bureaus do not show the word "short sale" on your credit report. It may say "paid in full for less than agreed" or "settled for less," among other categories. Some clients have reported negative FICO Score drops from 50 points to 150 points.
The major point drops result mainly because of the missed payments, not the short-sale itself. See my #4 point above... As long as you qualify for the Short-Sale, you can get approval on one. I had clients do this, and miraculously, their credit was nearly unaffected!!
WHY NOT TO LET THE BANK FORECLOSE:
Buying a home after a Foreclosure, can take from 5-7 years. The worst part is, after a Forclosure, your score will drop anywhere from 200 to 400 points. And, your credit score will remain on your credit report as a public record for 7 to 10 years.
This is why you should take full advantage of doing a short-sale, if at all possible. For more information, please call me, or email me directly.
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Right on Temple. Very good description of why someone should bother to go for a short sale, rather than a foreclosure.