If you’re struggling to make your mortgage payments, you may be facing a difficult decision between a short sale and a foreclosure. Understanding the differences between the two options can help you make an informed decision that best suits your needs. Here are a few key differences to consider.
Short Sale Vs Foreclosure
Impact on Credit Score
A short sale can drop your credit score by 50-150 points, while a foreclosure can drop it by 200-400 points. While a short sale can still have a negative impact on your credit score, it can be less severe than a foreclosure.
Length of Time on Credit Report
A short sale can appear on your credit report for 18-24 months, while a foreclosure can stay on your credit report for 7-10 years. This means that a foreclosure can have a more extended and severe impact on your credit score and your ability to obtain credit in the future.
Time Before Eligible to Buy Again
After a short sale, you may be eligible to buy a new home in as little as 1-2 years, while a foreclosure can prevent you from buying a new home for 5-7 years. This means that a short sale can allow you to start fresh and move on with your life sooner.
Why Choose a Short Sale Over Foreclosure:
A short sale can be a better option than foreclosure for several reasons, including:
- Protect Your Credit Score: A short sale can be less damaging to your credit score than a foreclosure, allowing you to recover faster and qualify for a new mortgage sooner.
- Avoid Foreclosure: A short sale allows you to sell your home and get out of your mortgage, avoiding foreclosure and the associated fees and issues.
- Debt Forgiveness: In some cases, your lender may agree to forgive the remaining balance on your mortgage, allowing you to walk away debt-free.
- Qualify for a New Mortgage Sooner: After a short sale, you may be able to qualify for a new mortgage sooner than if you had gone through foreclosure.
If you’re facing foreclosure or are already in the process of foreclosure, a short sale can be a viable option to avoid foreclosure and protect your credit score. Understanding the differences between a short sale vs foreclosure can help you make an informed decision that best suits your needs. Contact Dan Belcher at Mortgage Relief for a free consultation to learn more about your options and take control of your financial future today.