Short Sale Benefits
At first glance, it may not seem that a Short Sale has many benefits over a Foreclosure. However, after more research, you will find that there are many advantages to completing a Short Sale, rather than letting your property go to Foreclosure.
- DEFICIENCY JUDGMENT
- When your property goes to Foreclosure, your lender has the legal authority to pursue the amount that you owe. In a recourse state, which is what Ohio falls under, it allows the lender to pursue the homeowner after foreclosure proceedings are complete.
- When a Short Sale is negotiated, you have the chance to request payment in full and no deficiency judgment or cash contribution. This gives you the peace-of-mind to know that, once the transaction closes, your lender will not pursue you anymore for the difference in what you would owe. In addition, there are Government programs that are in place that provide incentives to the lenders, giving them further motivation to approve a short sale with full debt forgiveness.
- ABILITY TO BUY SOONER
- Once a Foreclosure is reported on your credit, it can take anywhere from 5-7 years to qualify for another mortgage. Additionally, when applying for another mortgage down the road, having a foreclosure on your credit could affect interest rates for your new mortgage.
- Once a Short Sale is closed, you are typically permitted to apply for a home mortgage in as little as 2 years. Investors such as Freddie Mac, Fannie Mae and FHA support this timeframe.
- CREDIT REPORTING
- Foreclosures generally last around a year and a half. During that time, your credit is reported negatively, for missed mortgage payments, and you have the dreaded time when the Sheriff will post a notice on your house for the Sheriff Sale, when the lender sells your house at public auction. Additionally, a Foreclosure will remain on your credit for 10 years and is permanent in the public records of your county.
- Short Sales generally last anywhere from 3-6 months (depending on different circumstances). This shorter time frame means fewer missed mortgage payments are recorded on your credit and you are informed of a closing date, allowing you to plan for your move-out. Additionally, certain Government Programs stipulate what the lender will report to the credit agencies. Typically, a Short Sale is reported as the following: “Paid For Less Than Amount Owed”, “Settled As Full”, “Paid As Negotiated”.
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