Short Sale Benefits
- The bank is not in control of the sale, you are.
- Knowing who is buying your home may help you sleep better at night.
- Save yourself from the stigma of Foreclosure.
- You can be current on payments while still completing a short sale.
Buying Again After A Short Sale
If you have not fallen behind 30 days or more on your loan and the lender does not require that you pay back the loan, guidelines by Fannie Mae may allow you to immediately buy another home. 3 years is the wait time for an FHA loan.
Buying Again After A Foreclosure
Some guidelines may allow you to purchase a primary residence in 5 years. With out guidelines, the wait is 7 years.
Investors that do not occupy the home will wait 7 years to buy with a Fannie Mae insured loan.
How Your Credit Score Is Affected
A short sale does not show up as a derogatory mark on your credit, credit bureaus may say “paid as less than agreed” or pay as agree,” clients in some cases have a 50 to 130 point drop in their FICO score. Generally the drop in your credit score is linked to behind in payments, otherwise know as a default.
Length of Time To Move After a Short Sale
If a notice of foreclosure has been filed, with the right documentation a postponement of the sale date may be obtained while the lender contemplates the possibilities of your short sale. Waiting for a short sale approval can be 2-3 months if not longer.
Length of Time to Move After the Foreclosure
If you have not made an arrangement with the bank they can ask that the property be vacated at once and can start eviction procedures.
Taxation Difference After Short Sale and Foreclosure
A short sale primary residence is exempt until 2012 under the Mortgage Debt Relief Act. Subject to certain guidelines investors are not exempt under the Mortgage Debt Relief Act. Foreclosures are the same but lenders may in some cases send out a 1099 even if the home owner is exempt.
Before choosing a short sale or foreclosure it is advised to seek a legal and tax professional.