Foreclosures don’t happen overnight with a quick process and a sudden closure. They are a long, painful and draining experience for all involved. An owner of a distressed property can request a short sale, even when the proceedings are ongoing. Here are a few benefits for pursuing a short sale over just surrendering to the foreclosure juggernaut.

You are mostly in control of the sale, not the bank. The bank does get to approve of the short sale, the amount and the transaction. That can be a couple of weeks and sometimes holds up the closing, so be ready.
You will spare yourself and your credit the label of “Forclosure”. Big Bonus There!
You don’t have to be in trouble to do a short sale. You might be current on your payments and still get one done.
Your home sale will be handled like any other home sale. In fact most credit agencies look at a short sale as just another transaction. A short sale may not detract from your credit score, because most credit bureaus do not show the word “short sale” on your credit report. Some clients have reported negative FICO score drops from 50 points to 130 points, usualy when the loan is in default. In a foreclosure you can see a point drop between 200 and 400. That’s a huge, continuing hit. It stays on your record up to ten years.

Will buying again be affected by a short sale? A little, depending on how your current mortgage stands. If you’ve never fallen behind 30 days late and your lender doesn’t require that you pay back the loan, Fannie Mae guidelines may allow you to buy another home immediately. Normally, The wait for an FHA loan is 3 years. If you are behind and a short sale is granted by your lender, you may qualify to buy another home with a Fannie-Mae backed mortgage within two years.
After a foreclosure, there’s a boatload of restrictions. With certain restrictions, you may be eligible to buy another home in 5 years if the home was your primary residence. Without restrictions, the wait is 7 years. If you are an investor and do not occupy the home, the wait to buy with a Fannie Mae insured loan is 7 years.

This is pain-filled, aggravating time for the homeowner. By this point, they’re worn down and demoralized. More than a house, they’re loosing their home, a place filled with memories, comforts and history. Years later, just driving down the street, will create a stifling barrage of “what if’s”. All that heavy responsibility is being funneled down on their shoulders and it gets heavier and heavier as the foreclosure looms closer. The thought of trying something…anything to avoid foreclosure is more than many can bear to even contemplate. It’s so much easier to just go with the flow and surrender. Self pity can be a serious comfort, if you feel there’s no where else to turn. The long-lasting pains and penalties of foreclosure are worth avoiding, if possible. If you’ve received a foreclosure notice, make sure your represented by a real estate law professional. That’s the best money you’ll ever spend.

Good Luck and try to have fun every day!

Lew McConkey
Focused on Home Buyers and Sellers in Brockton, Abington, Whitman, Hanson, Halifax and East Bridgewater

Rosen Realty
(781)252-9789
Lewmcconkey@rosenrealty.com