Making the decision between a short sale and foreclosure is not an easy one. Nobody wants to let their house go and they definitely don’t want it to hurt them worse financially than it already has. Below is a list that lays out benefits and facts of short sales and foreclosures to help you make the decision.
- You are in control of the sale of your home, not the bank
- You will know who is buying your home
- You won’t have to say your home was “foreclosed” upon
- You can be current on your payments and still be eligible for a short sale
- The sale is handled like any other home sale
- You can usually purchase another home within two years of the short sale, depending on the situation
- It will negatively affect your credit, it depends how the bank reports it, and the deduction can range from 50 to 130 points
- It will stay on your credit report for 7 years
- Banks will normally negotiate with the seller
- Short sale approval can take from 2 to 3 months or longer and you are allowed to stay in your home during this wait
- You have to prove a financial hardship
- Your home’s current market value must be less than you what you still owe on the home
- You can typically buy again within 5 to 7 years
- It will negatively affect your credit score with deductions from 105 to 160 points
- Can affect you getting a job; if a prospective employer runs your credit, they may deny you because your home was foreclosed upon
- Banks are unwilling to negotiate deficiency judgments with the homeowner
- The bank will most likely want you to immediately vacate the property
Making your choice depends on your situation. The above facts can help you figure out which one is best for you. Whatever you choose, make sure you have a real estate agent to help you make it through the process; they can help you assess the pros and cons of each choice in addition to helping you with the banks, paperwork, the sale, etc.
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