Difference between short sale and foreclosure
Nowadays purchasing a new home is so big deal of everyone’s life. When you have problem to pay monthly payments to the mortgage loan and you are going to lose your home in foreclosure you can use short sale to avoid foreclosure and its devastating effect. Actually the short sale is become a common of getting out of mortgage debt in every society. The short sale and the foreclosure both are with same negative impact on your credit report. In this real estate market many wonder about the difference between the foreclosure and short sale. These two have also much difference which is discussed bellow.
According to the Freddie Mac the both option will reduce your credit score by 200-300 points. The short sale does not create a huge ding on your credit score and the foreclosure will reduce your credit score by 300-450 points where a short sale may affect it by 150-200 points. The main difference of the both option is there staying time of credit report.
After the foreclosure procedure the borrower will have to wait for 7 to 10 years to avail the new mortgage loan and on the other hand the short sale will stay on your credit score for the period of 2 to 3 years from the completion of the total short sale process. The foreclosure takes so longer time to complete the foreclosure process but the short sale is so less time consuming and less costly. The lenders also get support from the government to make short sale of the default house instead of foreclosure of them.
Neither as per the lender and the borrower both of these events are not the best way nor to avoid all costs or protect the credit. When you plan to switch to a new life with a new home the short sale is only the best way to get out of your mortgage loan dues.
