Losing your home to foreclosure due to an inability to keep up with your monthly mortgage payments is one of life's most unpleasant experiences. It is also an event that continues to affect your life long after your home is gone and your credit score plummets. The fact is, there are a lot of homeowners out there feeling the crunch after facing some sort of hardship like serious illness, a major accident, divorce, relocation or a recent job loss. It can happen to anyone, so it's smart and proactive to research and understand the your available options if you find yourself in trouble financially.
The inevitable result of a foreclosure is the lender taking your house. Not only will you lose your home, but the lender can get a judgment against you for what you owe on the loan PLUS any costs for the foreclosure action. And as if that weren't enough, your credit report will be suffer tremendously for years to come. There is simply no upside to foreclosure. It should be avoided at all costs.
A short sale is a popular option for homeowners facing a hardship. Does this sound like your situation? Your husband lost his job and the mortgage payment is too high to pay. You're almost certain by next month you cannot make the payment on time. You can't sell your home as a regular sale because the market has dropped significantly and what you could get from a buyer right now would never pay off your current mortgage. YOU are upside down! In this case, you absolutely can still sell your home for less than what you. You put it on the market with an experienced agent, ratify a contract with a buyer and present a short sale package to the lender. It is that simple. Of course, you could never describe a short sale as easy by any means. There is a lot of paperwork and waiting involved, but the good news is, you can still live in your home while you wait for the bank to decide. The whole process can take anywhere between 2 and 8 months (sometimes more) to close, but you will have avoided foreclosure AND had time to plan for the future. If you think a short sale might be the best choice for you or even if you just want to ask more questions about what it takes to do a short sale, fill out our online form and give us more information about your situation. We do not share information and there is no obligation to list your home for sale. We just want to give you all your options and help you avoid foreclosure.
While a short sale will save you from foreclosure, it will also have a negative effect on your credit score, frequently lowering it anywhere from 50-200 points. This can be overcome more quickly than the black mark of a foreclosure, especially if you manage to retain one or two credit cards and keep them current, while paying all other bills on time. Perhaps equally distressing, the Internal Revenue Service frequently deemed the difference between the mortgage balance and the amount realized from the short sale to be taxable as income despite the fact that the debtor never saw a dime of it. This can be avoided by convincing the lender to give up the right to pursuit a Deficiency Judgment against the homeowner. For more information about this and other tax issues, feel free to call me at 703-400-6757 and I can refer you to an accountant or attorney that is qualified to give you expert advice.
The big key here is to avoid foreclosure. By nearly any measure, a foreclosure is the most damaging event your credit status can encounter - even worse than bankruptcy. In the course of getting your short sale approved you may miss your mortgage payments, and these will show on your credit. By avoiding foreclosure, you will likely be able to resume normal borrowing (car loans, credit cards, consumer goods and such) relatively quickly. Industry standards show the following is typical:
| Issue | Foreclosure | Short Sale |
| Credit Score | Score lowered anywhere from 250 to 300 points. Typically will affect score for over 3 years. | Late mortgage payments will show, but after sale loan will be reported as paid or negotiated. Can lower score as little as 50 points if all other payments are being made. Typically will affect score for 12 to 18 months. |
| Credit History | Foreclosure remains as public record on a person's credit history for 10 years or more. | Short Sale is not reported on a credit history. The loan itself is typically reported as "paid in full, settled". |
| Security Clearance | 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 officer, in the military, in the CIA, Security, or any other position that requires a security clearance, in almost all cases clearance will be revoked and position terminated. | A Short Sale on its own does not challenge most security clearances. |
We have heard it all and we've helped MANY people in your same situation. We currently have a 99% success rate in managing short sales and we can help you or someone you know as well. Don't wait for your lender to help or hire an outside national company that will more than likely rip you off! We are LOCAL and we are Certified Home Rescue Experts . Call for more information at 703-400-6757.
