Short sale vs. Foreclosure

Compare Short Sale vs. Foreclosure

Should You Choose a Short Sale Over a Foreclosure?

One of our clients asked us:

"My husband and I have been making our mortgage payments every month even though our home is underwater. We owe a lot more than our home is worth. Now, my husband has taken a lower paying job. We're thinking about walking away from our home and letting it go to foreclosure, but heard that we may qualify for a short sale. Which is better for us? A short sale or a foreclosure?"

Short Sale Benefits

Here are a few benefits for doing a short sale that may not have occurred to you:


Buying Again After a Short Sale

If your payments have never fallen behind 30 days late and the lender does not require that you pay back the loan, Fannie Mae guidelines may allow you to buy another home immediately. The wait for an FHA loan is 3 years.

If your payments are in arrears yet a short sale is granted by your lender, you may qualify to buy another home with a Fannie-Mae backed mortgage within two years, regardless of whether the home is your primary residence provided that you do not get other derogatory credit that may lower your credit score.

What is CFK (Cash For Keys)?

Banks are offering this to homeowners/ tenants of properties that have been foreclosed. It's a win-win situation for both parties involved. The bank is able to take possession of the property quicker without doing an eviction. Also, the property is not vandalized or destroyed. The advantage to the homeowner is they get CASH to help them relocate to another residence and maybe even enough to pay the deposit and first month's rent . Banks are paying anywhere from $500 to $3500.

Homeowners/ Tenants, don't vandalize the property, get paid to move which will have to happen anyways.

Why are the banks paying homeowners to do short sales?

IT IS A VERY SMART THING TO DO! Most banks are offering seller incentives to complete the short sale up to $3500. It is a win win situation for both parties. The bank does not take a property back in very poor condition because it has been flooded or trashed out by an angry homeowner. Also, they save money on legal fees to foreclose on the homeonwner. The banks also get a FREE housesitter to make sure it is not vandalized by others. Remember Homeowners, these banks can't afford to take your house back!