Short Sale helps you obtain a new mortgage loan
A homeowner who loses a home to foreclosure is ineligible for a Fannie Mae-backed mortgage for a period of 7 years with some exceptions based on extenuating circumstances. A homeowner who successfully negotiates and closes a short sale will be eligible for a Fannie Mae-backed mortgage within 2 years!
- Short Sale helps you obtain a new investment loan
An Investor who loses a home to foreclosure is ineligible for a Fannie Mae Backed mortgage for a period up to 7 years with some exceptions based on extenuating circumstances. An Investor who successfully negotiates and closes a short sale will be eligible for Fannie Mae-backed investment mortgage within 2 years!
- Short Sale looks better on a future mortgage loan application
On any future mortgage loan application, a prospective borrower will have to answer YES to question C in Section VIII of the loan application that asks “Have you had property foreclosed upon or given title or deed-in-lieu thereof in the last 7 years?” This will affect your future interest rate. There is no similar declaration or question regarding a short sale on a mortgage loan application. In other words, you don’t have to answer YES to question C and this will help you obtain a new mortgage loan with a lower interest rate.
- Credit Score is less affected by a Short Sale
Score may be lowered anywhere from 250 to over 300 points due to a foreclosure and this will typically affect your credit score for over 3 years. A short sale can lower your score as little as 50 points for 12-18 months if all other payments are being made on time. In a short sale, only late payments on a mortgage will show on a credit report, and the mortgage is normally reported as ” paid as agreed”, “paid as negotiated”, or “settled”.
- Credit History is less affected by a Short Sale
Foreclosure will remain as a public record on a person’s credit history for 7 years or more. A short sale is not reported on a persons credit history. There is no specific reporting item for “short sale”. In most cases a loan is typically reported “paid in full, settled less than balance” or paid as negotiated”.
- Security Clearance is less affected by a Short Sale
Foreclosure is the most challenging issue against a security clearance outside of a conviction of a serious misdemeanor or felony. If a client has a foreclosure and is a police or security officer, in the military, in the CIA, or any other position that requires a security clearance in almost all cases clearance will be revoked and position will be terminated. On its own, a short sale does not challenge most security clearances.
- Current Employment is not affected by a Short Sale
Employers have the right and are actively checking the credit regularly of all employees who are in sensitive positions. A foreclosure in many cases is grounds for immediate reassignment or termination. A short sale is not reported on a credit report and is therefore not a challenge to employment.
- Property value of neighborhood is enhanced by a Short Sale
If you do not do anything about the house being foreclosed upon, the lender will eventually take possession of the house via a Sheriff’s Sale, which can cause some embarrassment to the homeowner and bring down the value of other homes in the neighborhood. A better option is for the homeowner to leave with their dignity intact by selling the home in a short sale. The value of other homes in the neighborhood will remain intact and interested neighbors will think that the homeowner is simply selling their home.
- Lender’s pay homeowner’s Compensation
Staying until the lender forecloses may result in the lender offering you a $1,000 in a moving assistance program called “Cash for Keys.” Homeowners in a short sale can receive anywhere from $3000 up to $15,000 for moving assistance.