Negotiating Partners, LLC
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Benefits of a Short Sale

Minimize damaging impact to credit

Foreclosure can remain on your credit for up to seven years while a short sale usually gets reported as a “settled debt” and is significantly less damaging.  A Foreclosure that results in a Judgment can stay on your credit for up to 20 years.   With a short sale, your FICO score may not be as negatively impacted as it would be with a foreclosure, and you will be able to get into a new home much sooner as well.

Negotiating Partners, LLC is not a credit counseling agency, but credit experts say that a foreclosure will typically reduce a borrower’s FICO score by 200 to 280 points and the borrower would usually need to wait more than 60  months according to FNMA before a lender will offer any kind of interest rate that makes sense.  A short sale, on the other hand, will typically only result in an 75 to 125 point hit to the borrower’s credit and a significantly shorter waiting period before buying another home, usually about 18 months or less.  A credit report is like a fingerprint, specific to the individual, therefore no one can say for certain what the effect on your individual score will be.

Minimize financial exposure/liability

In many foreclosure situations, the lender will ultimately sell the property at a significant discount once they foreclose and repossess the property.  The homeowner can then be financially liable to the lender.  While the same may be true with a short sale, the difference is with a short sale a good Negotiator may be able to minimize the financial exposure by mitigating a deficiency judgment.  In a foreclosure, however, once the lender repossesses the property, the homeowner is typically defenseless with respect to what follows next.

The big key here is to avoid foreclosure

By nearly any measure, a foreclosure is the most damaging event your credit status can encounter - worse than bankruptcy.  In the course of getting your short sale approved you may miss your mortgage payments, and these will show on your credit. 

By avoiding foreclosure, you will likely be able to resume normal borrowing (car loans, credit cards, consumer goods and such) relatively quickly.  A Short Sale will lessen the impact of losses to the lender and also helps maintain property values in your neighborhood so many consider the short sale path as a good moral decision.   

Negotiating Partners, LLC
 OFFICE (727) 434-1021
FAX (727) 498-2970

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