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Lee Ernst

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Short Sale Versus Foreclosure: Which is right for you



Short Sale versus Foreclosure. How to decide which is best for you.
 
  • By Lee Ernst
  • Today’s home sellers are frustrated with the market. The loss of equity has put many sellers in a predicament that has never been as popular as it is today, the burden of selling a home that you are upside down on. In this comparison we will cover the benefits of opting for a Short Sale with the goal of how to decide which is best for you.
  • The benefits of going into foreclosure are
  • • Short Term finality
    Other than the feeling of being done with your home and the uplifting feeling of walking away, there really are no financial or beneficial reasons for this option.
  • The negatives of a foreclosure are
  • • Deficiency Judgment. The bank has the right to come after you for the loss they have incurred.
  • • Inability to obtain a government job.
  • • Employers unwilling to hire with a foreclosure on your record.
  • • Your Credit Score dropping and not rebounding for years.
  • • Not able to apply for a mortgage for years.

  • The benefits of a Short Sale are
  • • Waiver of Deficiency Judgment. This is a write off of the amount of loss the bank has incurred. With a successful short sale there will be a waiver of the deficiency.
  • • Credit score not being affected for more than a few months. A typical drop is 50 points and rebounds in 4 months back to pre short sale status.
  • • Credit report never says Short Sale. Debt is marked as “paid in full”
  • • Other creditors do not know you completed a short sale. Your status with them will remain unaffected.
  • • You can apply for a Mortgage once your credit score reaches 620. Less for certain types of loans.
  • • The home usually sells for a little more money than a foreclosure. This is because the homes are still lived in and taken care of until the day of closing.
  • • The neighborhood benefits from a higher sale and a non vacant home.
  • Finally, looking at the differences between the two, you will be able to make a good sound decision that will play a role in your finances for years to come.
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