Selling your home when you’re facing economic hardships can be a tough decision. A short sale and a foreclosure are two possibilities that may be accessible to you, and each has a different effect on your financial situation. Continue reading to find the pros and cons of a short sale versus a foreclosure.
Pros of a Short Sale
The most significant benefit of performing a short sale is that you’re able to get relief from your mortgage obligations. You can typically get a new home loan approval much more quickly after a short sale than after a foreclosure. In fact, your credit score is also more likely to recover more quickly than after a foreclosure. You’re also able to still live in your home while the process takes place, which can be a huge financial and mental relief. The lender frequently covers closing costs and broker’s fees. Additionally, the lender may offer payment to offset relocation fees in its closing package.
Cons of a Short Sale
Short sales are very time-consuming processes. They may take up to a year to complete, whereas foreclosures proceed considerably more quickly since lenders are eager to recoup their losses. Also, you’ll need to show your lender why you’re experiencing financial hardship.
Pros of Foreclosure
A foreclosure can be a relatively quick process. You can also start saving money as soon as you realize you’re about to face foreclosure instead of continuing to try and make mortgage payments. You’ll get a fresh start and hopefully learn from any mistakes you might have made for the next time you buy a home.
Cons of Foreclosure
Your credit score might decline by 200 to 400 points in a foreclosure. Since you must incur late mortgage payments on your route to foreclosure, it affects your credit much more harshly than a short sale would. After a foreclosure, securing a new house loan might take up to seven or more years.
When you’re looking at the pros and cons of a short sale versus a foreclosure, it’s clear that obtaining a short sale will likely be much more beneficial for your current and future financial situations. The professionals at Short Sale Cooperative can act as your trusted short sale negotiators and connect you with the right people to ensure you’re able to get approval from your lender. Feel free to contact us with any questions you may have.