Do I Have Any Available Alternatives? A Foreclosure Or A Short Sale?

Whenever you do something that impacts your finances, it will most likely have an effect on your credit score. These days, there are endless numbers of families experiencing a ding to their credit score as a result of the debilitating effects of the turbulent real estate climate. This hit to your credit holds true of a foreclosure and short sale too. However, a short sale is likely to impact your credit like a foreclosure will.

In a foreclosure, late payments that lead up to the actual foreclosure will have a huge affect on your score. Some people who end up foreclosing on a property discover that their FICO score (the agency that calculates credit scores) drops somewhere between 175-300 points! Thats a huge decline, and can have a protracted negative impact on your potential home buying prospects. In addition, the average foreclosure shows up on your credit report for up to ten years. This may be changing, especially because the tumultuous mortgage climate has affected many otherwise creditworthy homeowners, and it is possible that borrowing regulations may change for people who filed for a foreclosure in this mortgage disaster.

So what can you do if foreclosure seems like your only option? Well, there are options that can help you attain a comparable end result which might have preferable financial outcomes for your family. The foreclosure avoidance option known as a short sale may be the perfect decision for you.
So, can a short sale be superior for your financial health than a foreclosure? Well, if you work with a short sale lawyer, a real estate agent, and your mortgage institution, you may be able to negotiate a short sale without missing any house payments. Keeping current on your payments helps preserve your credit at a higher rate than missing payments. While winding down the negotiation process, you should ask your short sale attorney and real estate agent to work with your bank and request that they report the sale as paid in full on your credit report.

Do not this scenario lull you into a sense of security. A short sale in and of itself is no promise that your credit will remain unaffected. That accomplishment is difficult at best, however, your chances of affecting your credit score less are significantly improved when compared with a foreclosure. Dont be disheartened throughout the short sale process. It is not immediate. The good news is, the whole procedure does seem to be moving much quicker than it used to, although it may not seem like it is moving all that rapidly to you. The main reason it takes so much time is you have to wait for the lending institution to approve the short sale. Keep in mind, before they can approve the short sale, you have some work to do. You must provide them with detailed information about your financial circumstances. Your foreclosure avoidance lawyer and their real estate professional will be able to direct you all the way through that process.

The other down side is, you might have been current on payments before deciding to pursue a short sale, however by the time the lender finally works on your file and approves your short sale, you may have needed to use the cash you would have used to pay your mortgage, which could result in you missing payments while waiting for the short sale to be approved. You may not even qualify for a short sale. This leaves you in another difficult position. Do you attempt to keep the house and see if you may qualify for a loan modification program? Or do you let your house go to foreclosure. Either way, if you are thinking about letting your residence go to foreclosure, you may decide to explore the short sale alternatie, because it may have less of an influence on your credit score.