Of Course There Is A Difference Between A Foreclosure And A Short Sale!
We look at articles regarding short sales and foreclosures on a daily basis and one thing we often see is a debate between whether short sales have the same negative impact as a foreclosure or not. For years we’ve been indicating that foreclosure’s are worse. Now, the evidence is portrayed through the demise of many to-be boomerang buyers. Let me explain.
The phenomenon we are seeing nowadays is illustrated well via a case in New Jersey with a man named Michael Son. Michael was a to-be boomerang buyer. A boomerang buyer is one who previously conducted a foreclosure or a short sale and now are eligible to qualify for another mortgage after years of being in the penalty box.
Michael did a short sale and a couple of years later, he repaired his credit to a solid 720 and was easily able to put a 20% down payment.
Only weeks away from closing on his new 3 bedroom ranch style home, he was notified from his lender that due to a computer glitch, his short sale was classified as a foreclosure.
He did not get the home… and spent about $2000 during the home buying process. *Read the full article here
Michael now has to wait 5 more years unless he hires an attorney in which there are no guarantees.
What is the lesson we can learn from this story?
- Number 1: Always always always sign up for a legitimate credit repair service before or during the short sale. It’s cheap and it uses attorney’s to negotiate and remove negative items off your credit report i.e. a short sale or a foreclosure.
- Number 2: Michael’s case is clear evidence that a foreclosure is worse than a short sale. “Guidelines from government-sponsored mortgage financiers Fannie Mae and Freddie Mac say short sellers should be able obtain a new loan after two years, whereas borrowers who foreclosed need to wait seven years.” Let’s let this debate die here today!
For those who are in pre-foreclosure and/or are thinking about allowing your home to fall into foreclosure, contact our short sale experts and we will help you determine what the best option is for you at this time.
Or feel free to email me at Peter@seattleshortsaleblog.com
Hope this helps