Stop! Read this now before you make a decision to foreclose on your home. Contrary to popular belief, it is not that difficult to qualify for a short sale and it is less harmful than a foreclosure. A foreclosure will be harmful to your credit score, financial record, and future loan qualifications. Let’s explore the benefits of choosing a short sale over foreclosure of your home.
Protect your credit! According to Real Estate Investing Tax, A reason for debtors to consider a “short sale” instead of a foreclosure is to try to protect their credit history. A bad mark on your credit will haunt you making it difficult to apply for loans in the future. Let’s examine the effects of a foreclosure on your credit and evaluate the positives of a short sale. While a foreclosure will eliminate your current mortgage situation, it drops your credit score by 250 points or more. However, a short sale is less damaging to your credit by only dropping your score 150 points or less. If foreclosure seems like the only way out, think about what happens to your financial record.
Keep out of the Court! Foreclosing on your property doesn’t spare you from the judge. Always get a lawyer involved when contemplating foreclosure as an option out. When a foreclosure is filed, a permanent record (judgement) is filed with the court, unless you are in a non-judgement (non-recourse) state. This judgement is permanent and will not drop from your financial record unless it is paid off, settled, or bankruptcy is filed. However, selling your home through a short sale drops off your financial record after 7 years. Placing your home up for foreclosure not only affects your financial record, it is proven to make purchasing a home in the future difficult.
Save your hard earned money! Making the decision to foreclose on your property will make it nearly impossible to qualify for a loan. According toForeclosure Fish, Banks may require at least a 35% down payment and offer interest rates above 10% if foreclosure victims try to qualify for a loan in the first months after the foreclosure. When you file for foreclosure, you have to wait 5-7 years before you can qualify for a loan and you’re required to put 10%-20% as a down payment. However, a short sale makes you eligible for a loan only after 2 years, and results in a down payment of 10% or less. How much is it worth to save your reputation and your hard earned money?
You are not alone! Get the help you need today, there are short sale experts willing to help you. Don’t let foreclosure damage your credit score, financial record, and future loan qualifications. Take this information and run with the fact that you don’t have to settle with foreclosure as your only option. What are you waiting for…Get help with your home today, contact an expert now on short sale.
Michael C. Gray, “Real Estate Short Sale vs Foreclosure Tax Consequences,“ Real Estate Investing Tax.
Nick,”How to Get a Mortgage Loan After Foreclosure,” Foreclosure Fish.