Short Sale vs Foreclosure What to do....

Concern

Short Sale Results

Foreclosure Results

Your Future Fannie Mae Loans

You will be eligible for a Fannie Mae backed mortgage after only two years following the successful completion of a short sale.

If you lose your home due to a foreclosure, you will not be eligible for a Fannie Mae backed mortgage for at least five years.

Your Future Loans For Any Mortgage Lender

You will not be asked to declare or be questioned regarding a short sale on any standard loan application (1003).

You will be asked on any future standard loan application (1003) if you have had a property foreclosed in the last seven years, therefore affecting your rate.

Your Credit Score

Following a successful short sale your mortgage will be reported on your credit score as either paid or negotiated, lowering your score as little as 50 points and affecting you for only 12 to 18 months.

Your credit score can lower as much as 300 and usually at a minimum of 250 points and affects your score for over three years.

Your Credit History

A short sale is usually reported as paid in full and is not reported on your credit history.

A foreclosure will remain on your credit history for 10 years or more and will remain as public record.

Your Current Employment

Your short sale does not appear on a credit report and will not challenge your current employment status.

These days, many employers routinely run credit checks on employees in certain positions. If you have a foreclosure on your credit report, some employers consider it a reason for termination or reassignment.

Your Future Employment

Again, since a short sale will not be included on your credit report, it will not have an effect on your future employment opportunities.

If you are applying for a position where your credit report is taken into consideration, a foreclosure is extremely harmful to your chances of being selected for a new job.

Your Deficiency Judgment

If your short sale is handled successfully, the lender may give up the right to pursue a deficiency judgment against you. If the lender does pursue a deficiency judgment against you, the amount will be considerably lower because your home was sold at a price closer to market value than that of an REO (Real Estate-Owned) sale.

In all foreclosures, with the exception of those states without deficiency, the bank has the right to file a deficiency judgment against you. Since your foreclosed home will have to go through the REO process if not sold at auction for a lower sales price, this results in a higher deficiency judgment against you.