If you’re one of the millions of individuals facing the prospect of losing your home, you’ve no doubt been made to feel as if being part of a “crowd” is somehow soothing...the old adage “misery loves company” may come to mind, but in reality, it stinks to be miserable, and it stinks most of all to be facing foreclosure. The doubt and apprehension of not only the process, but what happens “after it’s all said and done” looms ahead of you like an abyss.
While there’s no doubt the impact on your financial life will be significant, its recovery can be eased depending upon your next course of action.
Depending upon your particular situation, your financial institution may be willing to accept a short sale, rather than proceed with a foreclosure action. If this is the case, then you may be relieved to realize that the impact of such a procedure is less severe.
There’s no doubt, your credit rating will be negatively affected by a short sale, however it is possible that the drop in your rating will be much less severe than what it would be in a foreclosure suit. A drop of as much as 300 points is possible with a foreclosure, whereas one of the benefits of a short sale is that the drop can be as little as 50 points, depending upon the number of missed or late payments you’ve made. Once the sale has been completed, your credit report should reflect that the loan is “paid in full, settled” for approximately 3 years time.
It may not seem fair, but as many companies are requiring credit checks on new hires, a poor credit rating can impact your ability to get hired, or perhaps even receive a promotion, depending upon the employer’s internal procedures.
This is especially so when employees are required to be entrusted with money and valuables. The reasoning behind this kind of policy is that individuals who are financially irresponsible with their own money present a potential embezzlement risk.
If you have a short sale on your credit, it will show that it was paid, whereas a foreclosure is clearly reflected in the report
After a foreclosure, the wait time is longer than with a short sale, especially if you’re expecting to find Fannie Mae backed financing. The qualifications to obtain a Fannie Mae Loan after you’ve been foreclosed is 7 years, however after a short sale you can obtain financing in as little as 2 years after the sale. Fannie Mae reserves the right to adjust these time frames, depending upon the circumstances of the short sale or foreclosure, as well as the amount of deposit you’re able to pull together as a down deposit for another home.
There is life after losing your home. Despite the difficulties and hardships associated with losing a home, either by short sale or foreclosure, a recent survey conducted by Yahoo Real Estate, revealed that less than half (43%) of the 1500 individuals polled (who were foreclosed upon) stated “their belief in homeownership had suffered as a result”, which obviously means that 57% of foreclosed homeowners still believed in the benefits of owning a home.
Realize that when faced with the difficult decision of giving up your home, a short sale can help to lessen the blow, allowing you to push the reset button and start again that much sooner.