What Homeowners Want To Know About a Short Sale
Posted on June 21, 2010
Filed Under Bankruptcy, Debt Relief, Loans, Personal Finance | Leave a Comment
When you try to talk to someone about doing a Short Sale first and foremost on their mind is how a Short Sale will affect them. You have to answer answer this question quickly or or this discussion will end pretty soon . Mainly two areas need to be addressed: Credit History and Future Home Buying.
How does a Short Sale Affect Credit Score
Some homeowners mistakenly believe they will prevent damage to their credit if they agree to a short sale as an alternative to a foreclosure but that just isn’t true . In many cases their credit is already tarnished if they haven’t been able to pay their mortgage payments . The sad truth is their credit score WILL be detrimentally affected and could drop two or three hundred points. The FICO score likely will drop the same for a foreclosure as it would a short sale. The only thing you can do as a Short Sale representative is to ask the lender not send a negative score to credit agencies but don’t expect it . It is very rare for them to agree to such a request but just the fact that you’ll try may satisfy the homeowner even if the request is denied.
How Does a Short Sale Affect Future Home Purchases
Even though this home may be lost many homeowners will want to own a home again . They will likely ask if that will be possible if they do a Short Sale and is there any benefit by doing so. Typically homeowners who have a home foreclosed must wait a minimum of two to five years before they try to buy again. According to Fannie Mae guidelines homeowners can consider buying another home only two years afterward a short sale. Considering the nonpayment that’s a relatively short duration of time. With this bit of information this question and the discussion ends on a positive note. If you can motivate them to begin rebuilding their credit and save for a down payment for their next new home.
Once you answer questions about Credit Score and Future Home Buying then you can begin to explain the Short Sale process to them .
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- Foreclosure vs. loan modification
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