Short Sale vs Foreclosure: Which is Best for You?
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If you are falling behind on your mortgage payments, then you need to find a solution as soon as possible. At this point, you might be considering two options: short sale or foreclosure. Here’s what you need to know.
Why a Short Sale Might Make Sense
When you go through a short sale, you’re making the hard decision right now so that you can get through the event. Once the short sale closes, you can start to repair your credit.
Up until this point, there’s really not much of a difference between the short sales and foreclosures. In both scenarios, you typically end up falling behind on payments.
I used to think, when things got really bad, that it might be easier to just walk away. Maybe it’s time to put the keys in the mailbox and be done? But there’s actually a reason to go through with a short sale.
When you work with your lender and keep up with other payments, like credit cards and car payments, then your credit might take a 50- to 100-point hit. But this impact on your credit score is usually relatively short-lived. Within six months to a year, you can start the repair process and move on.
Foreclosure Takes Longer (And Has a Bigger Impact)
In contrast, it can take much longer to go through a foreclosure… sometimes a year or two. Also, your credit score is going to be impacted much more than just 50 to 100 points. Most of the time, you will take the maximum hit possible on your credit report.
Because of the way your credit score is impacted, it causes a delay that will keep you from bouncing back financially. You end up paying more for all types of credit, including car loans, higher interest on credit cards, and more. Another potential drawback is that you may not qualify for the rental you want because your credit isn’t in good shape.
Finding the Best Solutions for Your Future
If you are looking at options to get through this tough time, then reach out to our team for more information. I’d love to discuss your options so that you can find the ideal solution. Call, text, or email me: (951) 473-0390 or [email protected]