Short-Sale vs Foreclosure – What you need to know
When a homeowner is at a point that they can no longer afford to keep their homes, many think their only option is to let the home be foreclosed on. There is another option, called a short-sale. A short-sale is when a home sale is negotiated with the mortgage company in which the lender takes less than the amount
owed. The foreclosure or short-sale affects homeowners differently. A few are:
- After a short-sale you are eligible for a Fannie Mae insured loan after 2 years, no restrictions
- After a foreclosure you are eligible with restrictions after 5 years, no restrictions after 7 years
- Credit applications do not ask if you have had a short-sale in your past
- Credit applications(Form 1003, #C Sec VIII) will ask if you have had a foreclosure or deed-in-lieu in the last 7 years
- Short-sales usually do not raise red flags regarding security clearances
- With a foreclosure, security clearances will usually be revoked, often times resulting in loss of employment
To receive a chart with more information about how a short-sale vs a foreclosure can affect you, and/or you would like me to explain the pros and cons of both options, please contact me. The earlier a homeowner does something, the more options
they might have.
I have obtained this info from other sources and it is currently accurate, but not verified. This info is subject to change.(if you are reading this 1 year from now, things might have changed). And individual effects may vary, and when it is something as serious as a foreclosure, I advise seeking legal counsel also.