Short Sale vs Foreclosure for me?

Short sales can occur if a lender (or multiple lenders) agrees to accept an amount less than what is currently owed against a home.  The more lenders there are on a home the harder it is to conduct a short sale.  It is often best if your real estate agent or lawyer contacts the lenders loss mitigation department to help in the process.  One common misconception is that when you proceed with a short sale there is not a “ding” on your credit record.  This is not true.  There is a hit to the credit score often 200 to 300 points.  Although unlike a foreclosure you may be able to buy another house in a little a 2 years.


A foreclosure usually starts when a homeowner stops making payments for whatever reason.  This ends with the mortgage holder selling the home at auction. If there are not any bids high enough the bank will bid and take control of the property.  Many times the homeowner can stay in the house for up to a year before being forced to move.  Like the short sale this can be a hit of 200-300 points on ones credit score.  It takes much longer (in some cases 7 years) before you can buy another home.


Neither of these options should be taken lightly.  If, as a homeowner, you are considering one of these options please consult an attorney, tax professional, and a real estate professional before signing any paperwork.  One reason you should contact a professional is because many times (not always) you are still obligated to pay the difference between what your mortgage company gets for your property and what your loan amount was.