The idea of losing a new home to foreclosure or having to undergo a short sale is a nightmare but it can happen. There are some lenders who would rather accept a short sale in order to avoid the complicated foreclosure process. A home owner may also prefer to short sale their home in order to pay off the loan for less than what is owed. In either case there are, of course, dramatic repercussions on a home owner’s credit.

How Short Sales Can Affect Your Credit
A short sale happens when the proceeds from the sale of a house are less than what the owner still owes on the mortgage. When sellers have a home go through short sale, they will typically loose 50-100 points on their credit rating. However, even after a short sale a buyer will be able to purchase a home usually in about two years at a good interest rate. Only the late mortgage payments will be reported when a homeowner undergoes a short sale.

How a Foreclosure Affects Your Credit
As a result of a foreclosure, home owners lose much more of their credit score than they would as a result of a short sale. Their credit score will usually fall near 300 points. It will also affect the length of time before a buyer will be able to receive a good interest rate when buying another home. After a foreclosure it usually takes about 10 years for buyers to achieve a good rate. Foreclosures must always be listed on any credit application. If an owner has more than one property go into foreclosure their score can drop nearly 600 points!

Ways Short Sales and Foreclosures Affect Your Life and Employment
Short sales and especially foreclosures can haunt you and threaten current and future opportunities not only when buying real estate but also in the work place. Some jobs that require security clearances are tempered by foreclosures as many times clearances are denied to people with a history of foreclosure. Foreclosures must be listed on applications and sometimes cause potential employees to lose consideration for a job. The Bank also has the right to file for Deficiency Judgment. If faced with short sale in one’s history the lender may be convinced to forgo seeking deficiency judgment. In foreclosure cases, the amount of the deficiency judgment, if the property is not sold at auction will sell at an even lower cost and result in a higher deficiency judgment being filed. With short sale, the home is usually sold near market value, so there is a lower deficiency judgment if one is filed at all.

Foreclosure Verses Short Sale Future Loan Issues
To give some examples of how foreclosure and short sales can affect your credit and personal finances, here are a few examples of how these decisions affect you. With a foreclosure, you will be ineligible for 5 years to receive a primary residence Fannie Mae loan and eligible after 2 years if you short-sale the home. With a non-primary residence loan you will be ineligible for an investment loan for 7 years if you have had a foreclosure and eligible after 2 years if having faced a short-sale. With a foreclosure your credit score is lowered up to 300 points for at least 3 years while short sale affects are usually only about 50-100 points and last a maximum of 18 months.

How to Handle Your Triangle Real Estate Investment
If you are facing a possible short-sale or foreclosure situation you need to speak with a lending profession or foreclosure/short sale expert to determine the best course of action to follow. The best thing to do is to contact a knowledgeable professional like, Greg Harrelson before the situation gets out of hand. Contact someone today to start making the choices that will save your credit and financial future.