When facing foreclosure, a short sale is often the best option, which does have a few advantages. If you owe more on your home than it’s worth and you really can’t wait for your property value to rise, the benefits of a short sale may just be what you need to recover from your financial burden. The advantages of a short sale include a shorter wait time, possibly less damage to your credit score and protecting your psychological comfort.
When you choose to short sale, you may be able to buy another home even though the information remains available to creditors for up to seven years. The short sale will appear on your credit report as a debt that was discharged, but hasn’t been paid in full. As a result, you’re more likely to qualify for a new home sooner than if your home was foreclosed. For example, Fannie Mae regulations state you can become eligible for a home purchase after only 2 years, when compared to 5 years that occurs with a foreclosure. Plus, lenders are more favorable to those who have gone through a short sale instead of a foreclosure. One short sale advantage is that is shows you at least made an effort to pay off the debt instead of giving up. A short sale gives you a little more credibility.
You will also be more likely to buy a home sooner after a short sale as there’s possibly less damage to your credit score. Although there’s debate about the subject, your credit score will be based on your history of timely payments, so try to stay current on your mortgage until after the short sale. If you miss payments or are late, it will certainly drive down your credit score.
Trying to remain current with your payments when facing the loss of your home is hard. The loss of your home carries a high level of moral and social stigma, which may influence your happiness. However, a short sale can provide you with a little more satisfaction as you didn’t just walk away from your financial responsibility.
A short sale isn’t easy, no matter how many benefits of a short sale you might receive. When facing the loss of your home, you need to consider all of your options, including the advantages of a short sale. If you’d like to learn more about the benefits of a short sale, contact Steve Larson today.