Here is why, per a lender we work with(see below) and who looks at many credit reports every day, Short sales are approved by your lender(the bank who has your current mortgage). The “approval” is very dependent on the agent you are hiring to negotiate your short sale.
We do a lot of short sales and in the “short sale hay day”, we closed hundreds.
We need to make sure the primary lender approves and if there are any other lenders on the loan, all lenders approve the short sale.
This is done by our communicative ways with the main and sub-lender banking institutions. We seek them out and work hard for our clients to ensure our clients are well represented and given a fair shake when the bank starts communicating with the FICO reporting agencies.
Short selling keeps more doors open than having a foreclosure on your record. If you are using a conventional loan – you are going to need to wait 7 years after a foreclosure. With a short sale you, most likely depending on your “other” credit, will be able to finance using a 3.5% FHA loan or a VA loan (if you are an approved veteran). With a short sale your ability to use a conventional loan is back to 3 years after, than 7 years. This is going to be really important when wanting to buy a condo/townhome which is not fha/va approved.
We have seen clients having their credit score brought higher after a short sale versus a foreclosure. This depends on what “else” you have let slip during the short sale process. If you allow other credit lines to fail, then your FICO score is going to take more of a hit. With a short sale versus a foreclosure, short sales seem to be a bit less harmful on the over credit profile. This is per our clients experience.
Also, with a short sale, you have a better idea of the “move out” date. With a foreclosure, you are at the banks(your loan institution) mercy. I will tell you having the sheriff’s show up unexpected to have you vacate your home is a very emotional process.
As I always tell my kids, you want to keep as many doors open as possible in life. When it comes to divorce, disease, job loss or other reasons to have you motivated to walk away from your home, short sales keep more doors open than having a foreclosure on your record does.
I’m Connor, short sales and short pays are a part of our real estate business.
Let me know when you are ready for our help and assistance. I’ll be here for you when you are ready.
With all we know about short sales, it could be that a short sale is not your best option depending on your own specific circumstances.
Let’s talk – call me and I’ll make myself available to answer your questions.
From our preferred lender about short sales versus having your home foreclose:
I wanted to give you some information about the differences with foreclosures vs short sales. Obviously, both will have a negative impact on the credit scores. I have listed some details of the short sale and foreclosure guidelines with FHA, VA and Conventional loans.
– FHA requires a 3 year period to past before you can get another FHA loan after a Foreclosures or Short Sale.
– VA requires a 2 year period to past before you can get a new VA loan after a Foreclosure or Short Sale.
– Conventional requires 4 years after a Short Sale but requires 7 years after a Foreclosure.
In each of these situations, you will need to have shown re-established credit after the Foreclosure or Short Sale and qualify with automated findings from Fannie Mae/Freddie Mac.
FHA and VA are very good options for purchasing after Foreclosure/Short Sales but when looking at condo/townhouses, the HOA complexes have to be approved with either FHA or VA accordingly. Unfortunately, the approved FHA and VA condos have been declining so not a lot to choose from (much more VA vs FHA approved condos).
Conventional purchases do not require to be approved on a Fannie Mae list but will require an HOA certification and review. This is often much more common and if you have at least 10% down, a limited condo review is possible. So, conventional would allow a new condo purchasewithin 4 years after a short sale vs 7 after a foreclosure.
The Short Sale gives you more options to consider in the 3 to 4 year range where the Foreclosure takes the conventional option off the table for 7 years. I hope this is useful information, please let me know if you have any specific questions.
24018 Lyons Ave, Newhall, CA 91321
Phone – 661-260-2970 Fax – 661-554-7121
Email – Dwayne@augustafinancial.com