"What is the difference between a short sale and a foreclosure ?"
"What affect will a short sale or foreclosure have on my financial future?"
These are great questions to ask.
So let me explain to you some of the key differences and compare them in a few different categories.
Short Sale: Basically when a person needs to sell their home for less than what they owe on the house.Foreclosure: When a homeowner is not making timely payments the bank or lien holder may decide to take back possession of the home through the process of foreclosure.
When it comes to your Credit Score:
While a successful short sale can effect your credit score for approximately 12-18 months, a foreclosure may affect your credit score for over 3 years. A short sale may lower your score by about 50 points, while a foreclosure could lower your score by about 200-400 points.
When it comes to your Credit History:
When you accomplish a successful short sale it's possible that it may not be reported on your personal credit history, but with a foreclosure your credit history could reflect this for 7 or more years.
When it comes to your Future Employment:
When seeking new employment most employers require a credit check. Having a short sale on your credit report may not create a problem for your employment, however having a foreclosure on your report, could be detrimental.
If you are facing the tough decision about whether to consider a short sale or risk having your home foreclosed on, please let me know. I'd be happy to help you navigate through the details of each option and help you determine which option may be best for you.
Information provided by: Pacific Northwest Title
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