Why to use them?
There are a number of reasons why a Short Sale is better for the homeowner than a Foreclosure.
Less damage to your credit: A foreclosure generally stays on your credit report as a ‘foreclosure’ for 7 years. But because there is currently no category on the credit report called ‘Short Sale,’ a Short Sale will generally appear on your credit report as debt that is ‘Paid in full, but for less than the full amount.’ (Note: this can change depending on how long you’ve been delinquent on the loan, what action the lender has taken against you, and what changes to the credit reporting and scoring system are made in the future.)
Less time before you can buy again: After a successful Short Sale, you will generally be able to obtain a mortgage to purchase another home in about two years. In contrast, there is usually a four to five year wait after a foreclosure before you can obtain a mortgage again.
More control of the outcome: If you have a recourse loan (i.e. your lender can pursue you for the difference between the amount they received from the foreclosure sale and the amount you owed at the time of foreclosure), a Short Sale allows you and your Realtor the opportunity to negotiate with the lender to give up the right to come after you for any deficiency balance that remains after the sale. If the home goes to foreclosure instead of Short Sale, the lender can come after you for the debt any time up to four years after the foreclosure.
More dignity: Initiating a Short Sale means that you’re being proactive rather than remaining at the mercy of the foreclosure process. You’re showing the lender that you’re doing your best to mitigate their losses. You are also doing the best thing for all parties involved, which will get you out of the situation with integrity and dignity. Future lenders will look favorably on this.
May stop the collections process: Although there are no guarantees, lenders will often stop the collections process once the Short Sale package has been submitted.
Orange County Short Sale Professionals
