Short Sale Vs Foreclosure Vs Loan Modification
Even though a
keeps on affecting you long after your home is
history by devastating your credit score, most people cannot be 100%
sure that they will be safe from Foreclosure because they can't
foresee the unexpected--a serious illness, a major accident, a
divorce or job loss can happen to anyone.
of all the available alternatives, Foreclosure is the WORST!
You should consider a short Sale and Its Advantages (a
Modification of Loan is a possibility but it may have major
problems, see discussion at the end). A Short Sale is a popular option
for homeowners faced with a hardship and lack of equity. In a short
Sale, you would sell your home for less than what you owe your
lender; also, importantly, the lender will pay for your Realtor's
fee and pay for
any delinquent Property Taxes and/or HOA dues.
PURCHASE IN THE FUTURE?
Short Sale: YES, with help from a Credit Repair Specialist you can own a home again in as little as
Foreclosure: A minimum of 5 years must pass before
Fannie Mae/FHA will loan money to a buyer with a past Foreclosure.
YOUR CREDIT BE AFFECTED?
Short Sale: Because the mortgage will be satisfied and
reported as paid, only late payments will be reported under
"derogatory items;" this can lower your Credit Score minimally
compared to a foreclosure.
Foreclosure: It typically lowers your Credit
Score 150-250 points.
Short Sale: Many employers are now checking credit
reports as part of the application process. Because a short sale is
NOT reported(*), the only thing that will affect an employment credit
check is the late payments.
(*) It is reported
that you attempted to pay off the loan.
Foreclosure: Because foreclosure is public record, it
may affect your chances at employment for up to 7 years.
This may be a viable option for some. However, some startling news
is making its was through the real estate industry. There is
information that now explains why
many Banks are not giving
homeowners their loan modifications. The information that is coming
through is that the banks are making too much money off of short
sales and foreclosures from Government adjustments and kick-backs. Many people are
holding out for a modification, hoping the Banks will give them a
reduced loan payment. (Many times they will add your late payments
to your loan amount and give you a lower interest-only payment for
3-5 years). If homeowners
wait too long after a default is filed, the Bank just takes the home
instead. Homeowners need to be aware of this possibility and not
just keep hoping that the bank is going to modify their loans.
A major problem is
that there is no consistentcy in the industry.
As you can see from the
information above, overall it might just be better to go for a short
sale upfront. If interested, ask me for the link to a
on the loan modification scandal.
I hope this information has been helpful. If you have applied for a
loan modification and the process seems too difficult, or delayed,
you may be getting a "warning" that it is just not going to
happen. Trust your intuition.
For more information, Call Marge Berry for an
appointment; she will be glad to answer as many questions as
she can for you, or
direct you to the proper legal experts.
Altera Real Estate
for her online
Tax Articles, and information on HAMP, HAFA, Short Sale Facts,
Articles by Attorneys, etc. (to help you make a more informed
decision) However, please Send you phone number, as she will need to
talk to you briefly first, if she has not already spoken to you.