Despite recent headlines hailing the economic recovery, many homeowners are still feeling a financial pinch. In fact, it’s still not uncommon for a homeowner to find that his or her home is underwater. If you’re struggling with an underwater mortgage and are debating between a short sale or foreclosure, it’s important to understand the benefits and negatives of each. Working with a foreclosure attorney can help you get the benefits you want, but a short sale can be equally beneficial. So which is best for you?
Understanding the Benefits of a Short Sale
When you’re dealing with an underwater mortgage, one of the major benefits of completing a short sale is that you are in control of the sale, not your bank. Because you have control and because you know exactly who will purchase your home, you generally will feel less stress than someone who is having their home taken by the bank. Furthermore, you don’t have to deal with the negative stigma that society has placed on foreclosures. On the whole, your short sale experience will likely feel very similar to the experience of selling your home in the traditional way.
Because you were already behind on payments before the short sale, your credit score will have experienced the bulk of its drop. A short sale will generally lower your FICO score by 50 to 130 points. Because loan applications don’t require you to mention your short sales (they will ask about foreclosures), you can begin the process of applying for a new home loan (or any loan, for that matter) immediately after your short sale.
However, sometimes a foreclosure is inevitable – or perhaps you feel that a foreclosure is the best option for you! If this is the case, it’s wise to seek the counsel of a foreclosure attorney immediately. There are many considerations, such as taxation after a foreclosure, or deficiency judgments, that a foreclosure attorney can assist with. While a foreclosure affects your credit score for 7 years, a foreclosure attorney can help make the process smooth. Trusting a foreclosure attorney will ensure that your rights are protected.