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Samir Bachour    REALTOR®    Scottsdale, AZ    602-614-4622    ElectricRealty@Live.com

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3 Solutions to sell your home | 8 steps to sell your home | what is a short sale | short sale vs. foreclosure | 8 steps of a Short Sale | For Sale By Owners
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short sale vs. foreclosure

 

Short sale or foreclosure which is a better deal

Issues

Successful Short Sale

Foreclosure
Credit Score
 


A Short Sales effect can be as brief as 12 to 18 months. Only late payments on the mortgage will show. This can lower the score as little as 50 points
 


A Foreclosure will affect your credit score for over 3 years and can lower that score between 250 to 300 points
 

Credit History


A Short Sale MAY NOT be reported on a person’s credit history
 


A Foreclosure will stay on a person’s credit history for 10 years or more
 


Deficiency Judgment
 


In some successful Short Sales it is possible to convince the lender to give up their right to pursue a deficiency judgment against the homeowner
 


In 100% of Foreclosures (except in those states where there is no deficiency protection in the law) the bank has the right to pursue a deficiency judgment
 


Future Employment
 


A Short Sale is not to be reported on a credit report and therefore should not be a challenge to employment 2
 


Most employers require a credit check on all job applicants. Foreclosures are one of the most detrimental credit items for your credit report. This could affect employment
 

 
Type of Loan Successful Short SaleForeclosure

Fannie Mae1
 


The homeowner will be eligible for a Fannie Mae-backed mortgage after 2 years
 


The homeowner is not eligible for a Fannie Mae-backed loan for 5 years
 


FHA
(late on payments)
 

3 years from the date the FHA Insurance
is paid by the lender – not the date of the Short Sale closing before a borrower may be eligible for another FHA loan
 
The homeowner is not eligible for a Fannie Mae-backed loan for 5 years
 

FHA
(current)
 

There is NO WAIT for Freddie- or Fannie-backed loans if current on all obligations, including installment debt
 
The homeowner is not eligible for a Fannie Mae-backed loan for 5 years
 

VA
(late payments)
 
The homeowner will be eligible for a Fannie Mae-backed loan after 3 years
 
The homeowner is not eligible for a Fannie Mae-backed loan for 5 years
 

VA
(current)
 
The homeowner will be eligible for a Fannie Mae-backed loan after 3 years
 
The homeowner is not eligible for a Fannie Mae-backed loan for 5 years
 

Conventional
(late payments)
 
The homeowner will be eligible for a Fannie Mae-backed loan after 2 years
 
The homeowner is not eligible for a Fannie Mae-backed loan for 5 years
 

Conventional
(current)
 

There is NO WAIT for a Freddie- or Fannie-backed loan if current on all obligations, including installment debt
 
Future rates may be affected if you have been foreclosed on in the past 7 years
 

1 Fannie Mae Announcement 08-16: Michael A. Quinn, Senior Vice President, Single Family Risk Officer
2 Short Sales are currently not explicitly reported on a credit report
Information supplied by First American Title Insurance Company
 
 
 
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