That depends on your score at the time of the short sale and whether or not there's a deficiency balance according to Jeanine Skowronski's article posted on MAINSTREET.COM recently. According to a FICO® study "the bigger the score...the harder they fall, and a Short Sale with a deficiency balance has virtually the same effect as a foreclosure.
If you're concerned about your credit score a short sale might not be right for you! Some homeowners are facing a temporary issue and may be able to re-negotiate with their lenders and agree to new terms.
The lender may offer a "Forbearance agreement" in which the homeowner is required to pay at least 20% or more of the total delinquencies including foreclosure fees and the balance will be added to your regular monthly payments over a period of 6 to 48 months. Lenders may offer a permanent change in one or more of the terms of your loan in an effort to get the loan re-instated, or current, and to achieve more affordable payments. This type of assistance from your lender is called a Loan Modification (More often than we would like the lenders view of a "work out or loan modification" is drastically different from the homeowner's) and can include;
•· Adding delinquent payments and foreclosure fees to the back end of your loan.
•· Changing the interest rate on your loan temporarily or permanently.
•· Extending the term of the loan (from let's say 22 to 40 years), which would drop the monthly payment, but increase the total cost of the loan.
•· Reducing the principal to a lower amount to better reflect a decreased value of the home
Also a "Short Refinance" occurs when the original lender agrees to accept less than what is owed AND another lender agrees to provide another loan to payoff the original lender.
But what if your situation is not expected to be for a short term? Or reducing your monthly payment by $150.00 is not going to help you make your monthly mortgage payment because of any number of reasons. Suppose your lender won't give you a loan modification or they already have and you've found yourself once again unable to pay your mortgage?
For many Americans who realize that they're never going to be able to pay (let alone "make up back payments") their mortgage, often lenders will accept less than what is owed as "full and final satisfaction" of the loan. This is called a Short Sale and our team is the subject matter experts in this type of transaction.
For a free confidential evaluation of your particular situation call us today of visit our website at www.distressed-home-buyers.com and click on "Homeowner Assistance" located at the top of the screen then "click here to learn more about how we can help" and register.
We're located in Fort Washington, Maryland. Our service is available to residents of Maryland, Northern Virginia and DC.
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