subject: Short Sale Vs Foreclosure [print this page] Nobody is totally immune from foreclosureNobody is totally immune from foreclosure. Sometimes no matter how hard we try to keep our finances intact, circumstances prevent us from being able to secure our finances as we may not be able to foresee the unexpected. Life may just throw us a serious illness, a major accident, a divorce or a job loss that may be out of our control and we may find ourselves in a big financial dilemma and at a loss on how we are going to dig ourselves out of it. Should such an occurrence happen to you, you may want to know what to expect so that you may not be too surprised later on. If lifes circumstances prevent you from being able to continue making payments on your mortgage, you might find yourself facing foreclosure. Instead of retreating further into depression it might be a good idea for you to buck up and be proactive in order to take whatever amount of control you can over your life once again by weighing the options of shortsalevsforeclosure.
One option may not necessarily be better than the other and that is why you may need to evaluate both choices to see which might work best for you. Although both choices come with their own consequences, you might want to sit down and make a choice between shortsalevsforeclosure. You may want to know what a short sale is in the first place. A short sale refers to selling off a house at a price that is insufficient to meet the balance mortgage payments still owed to your creditor. A short sale is generally viewed as a last attempt to avoid having to foreclose your property. Banks and lenders in general might prefer a short sale as settlement for the money due and forgive the remaining amount that cannot be recovered to avoid lengthy and costly foreclosure proceedings.
One of the benefits of a short sale as opposed to foreclosing a property is that you may be in control of the sale instead of the bank. If your property is foreclosed, you may lose total control over your home and your bank may instead take over all home owners rights from you and immediately assume ownership of your home. A short sale might also spare you the stigma of having your property foreclosed by your bank. Some might see it as a big failure and the ramifications of having to deal with foreclosures may be bigger and affect many aspects of your life.
After a short sale, you might not be able to immediately buy a new property or home. Within two years, you may qualify to buy another home with a Fannie Mae backed mortgage while the wait for a loan from the Federal Housing Association (FHA) might be 3 years. On the other hand if you decide to go through foreclosing your property you may be eligible to buy another home within 5 years time if the home was your primary residence. However due to the fact that your home has been foreclosed before you might have to wait 7 years before you could actually apply to buy another home. A short sale or a foreclosure both may impact your credit rating in a big way. Your FICO score may drop significantly because of a short sale or a foreclosure. Generally the points drop because you may be viewed as having fallen behind in your payments.
In general many experts may agree that anything that can be done to stopforeclosure may be much better than having to foreclose. Before deciding to short sell your home it might be better for you to explore other options because a short sale may put a dent in your credit rating. However, if all else seems to fail a short sale may be the only way out without having to go all the way to foreclosure.
