It’s a smart move to choose a short sale if you don’t get enough net to pay off your mortgage regardless of whether you’re facing foreclosure or not. A short sale is a better alternative to foreclosure wherein you get permission from your bank to sell your house for less than the amount you owe. A short sale is also highly recommended if you owe more on the mortgage than the worth of your home. As compared to losing your property to foreclosure, there are advantages that a short sale can offer.
In this post, you’ll learn the benefits of a short sale when selling your home:
You Can Buy Another Home Sooner
Even though a short sale can hit your credit report, this information will still be made available to potential creditors for up to seven years. It means that you’ll still be qualified to purchase another home sooner as compared to choosing a foreclosure. You can talk to a short sale realtor Riverside CA for professional help.
Here are the good-to-know things about a short sale when it comes to buying a home sooner:
- According to Fannie Mae regulations, a borrower can still be eligible for a home loan two years after a short sale.
- A foreclosure would take you five years, which is too long.
- You’ll have a higher chance of getting a mortgage loan in the future with a short sale as compared to a foreclosure. It’s because a short sale shows that you’re
- proactive in trying your best to pay off your debt instead of giving up.
- Under the Fannie Mae guidelines, you can be eligible to purchase another home immediately if your credit report won’t reflect late payments 60 days or longer.
It Is Less Damaging to Your Credit Standing
While a short sale can strike your credit score hard, it’s still a better option than foreclosure. You can limit the damage on your credit score made by a short sale by staying up-to-date on your mortgage payments until the sale is closed. Your credit score is calculated based on the history of all timely payments versus missed or late payments.
You Can Avoid Social Stigma
Whether you accept or deny it, losing your home via foreclosure can be morally and socially damaging. You don’t want to let go of your property just like that. Of course, you want to feel satisfied and happy in the end because you’ve done your best to pay your obligation. You also retain your dignity of selling your home instead of having the bank foreclose it.
Here are the drawbacks of foreclosure:
- Your homeownership right is stripped away.
- You’ll need to rent again because you’ll still be eligible to buy a new house after five years under the Fannie Mae guidelines.
- A “Notice of Public Sale” will be posted on your front door.
- Foreclosure will appear on your credit report for ten years.
You Can Choose a Trusted and Reputable Buyer
Your home is full of good memories, most especially if you’ve been there for many years, as this is where you saw your children grow and your relationship become stronger and happier. So, you wouldn’t want your home to be open to the public and end up with a harsh or negligent buyer.
At the very least, you want someone who will take good care of your home even if it won’t technically be yours. Also, you’ll be able to help your prospective buyer by giving a low price for a beautiful home. You provide a great deal that a buyer could not afford. For one thing, you can also score an excellent price for fixer-uppers.
You Can Avoid Expenses Associated with Foreclosure
As a homeowner, you know how devastating a foreclosure can be on your credit score and your family’s reputation. Along with these important aspects, you’ll also have to face paying different fees or charges that you won’t find in a short sale.
Here are some of the expenses associated with foreclosure:
- Administrative costs
- Repairs and maintenance costs. In a short sale, the buyer is required to perform repairs and maintenance, and not the seller.
Conclusion
As a homeowner, the last thing you want to happen is to experience foreclosing your property. It’s not good for your credit score as well as your reputation. There’s still social stigma associated with foreclosure. On the other hand, a short sale is a better option because you’ll be able to choose a good buyer for your home, buy a new house in two years, and you don’t have to pay foreclosure expenses.
