Which Is Better: Foreclosure or Short Sale?

Which is Better: Foreclosure or Short Sale?

If you currently experiencing financial hardship and you can no longer stay in you home, you have one of two options: foreclosure or short sale.

Short Sales

A short sale is what happens when you have to sell you home, but even the proceeds from the sale won’t cover the amount that you owe. Because you can’t fully repay what you owe, the lender has to agree to a short sale first. You also have to prove with documentation that your financial hardship will result in the inability to make your monthly payments. For example, you could provide documentation of job loss.

You will also need to work with your real estate agent to give the lender some sales prices of similar homes in your area. Only if the lender analyzes and approves this amount, will you be able to list your home. The lender will also review each offer before you can accept one officially. If the short sale process is completed before you have made late payments on your mortgage, your credit score can drop as little as 50 points. But if you start the short sale process too late, and late payments have already been made, your credit score can drop around 200 points.

Borrower rates are the lowest when their credit scores are 760 and higher. The more your credit score drops, the higher your rates will get. Getting a new mortgage for a new home purchase after a short sale might only take about 2 years if you can manage to put 20% down. But it can take as long as 4 years to get approved for a new home loan if you only put 10% down. This time period will vary from lender to lender however, so it is best to compare rates and terms with a variety. You will also need to contact your tax advisor to figure out if there are any consequences you will face from the short sale.


A foreclosure is what happens when you are unable to make your monthly mortgage payments due to financial hardship of some kind. This will happen regardless of whether you owe more or less than the home is worth.

Missing a mortgage payment is called defaulting. Your lender will send you a default notice if you are 30 days late (or more) on your mortgage payments. If you do not pay the amount you owe by the date on that default notice, the lender will begin the foreclosure process involving repossessing your home and selling it.

The foreclosure process will change depending on which state you are in, and the amount of time it takes from start to finish will vary as well. Timing estimates by state are listed by the U.S. Department of Housing and Urban Development (also known as HUD).

Your credit score after a foreclosure will drop anywhere between 200 and 400 points. This affects your credit score worse than a short sale because you will accrue late mortgage payments in the foreclosure process. After a foreclosure, getting approved for a new home loan can take up to 7 years. However if the situation was out of your control, like the job loss example, sometimes that period of time will be shorter. Comparing terms from lenders will help you find the one that will offer you a home loan sooner.

Categorized as Mortgage


  1. Hey would you mind letting me know which hosting company you’re utilizing?
    I’ve loaded your blog in 3 different web browsers and I must say this
    blog loads a lot faster then most. Can you suggest a good web hosting provider at a honest
    price? Thank you, I appreciate it!

  2. I will right away clutch your rss as I can’t
    find your email subscription hyperlink or e-newsletter service.
    Do you’ve any? Kindly permit me recognise in order
    that I may subscribe. Thanks.

  3. I love your blog.. very nice colors & theme. Did you design this website yourself or did you hire someone to do it for you?
    Plz answer back as I’m looking to create my own blog and would like to know where
    u got this from. thanks

  4. Its like you read my mind! You seem to know so much approximately this,
    like you wrote the e-book in it or something.
    I feel that you simply could do with some p.c.

    to force the message house a little bit, however instead of that,
    that is great blog. A great read. I’ll certainly be back.

  5. I’ll immediately grasp your rss as I can not find your e-mail subscription link or newsletter service.

    Do you’ve any? Please allow me recognise so that I may just subscribe.


  6. Ahaa, its pleasant conversation about this paragraph
    here at this weblog, I have read all that, so at this time me also commenting at this

  7. Heya i’m for the first time here. I came across this board and I in finding It really useful & it helped me out much. I am hoping to provide something again and help others like you helped me.

  8. It’s the best time to make some plans for the long run and it is time to be happy.
    I’ve read this publish and if I may I desire to counsel you some
    attention-grabbing things or suggestions. Maybe you can write subsequent articles regarding this article.
    I want to read more issues about it!

  9. We still can’t quite think I could often be one of those reading the important ideas found on this blog. My family and I are seriously thankful for the generosity and for offering me the advantage to pursue my personal chosen profession path. Many thanks for the important information I got from your blog.

  10. I truly love your site.. Pleasant colors & theme.
    Did you build this website yourself? Please reply back as I’m planning to create my own site and want to find out where you got this
    from or just what the theme is named. Appreciate it!

  11. Hiya, I am really glad I have found this info. Nowadays bloggers publish just about gossips and internet and this is really irritating. A good blog with interesting content, this is what I need. Thank you for keeping this website, I will be visiting it. Do you do newsletters? Can’t find it.

  12. I’ll immediately snatch your rss feed as I can not to find your
    email subscription link or newsletter service. Do you’ve any?
    Please let me realize in order that I could subscribe. Thanks.

  13. Its like you read my thoughts! You appear to know so much about this, such as you wrote the guide in it or something. I believe that you could do with a few percent to pressure the message house a bit, however instead of that, this is magnificent blog. A fantastic read. I will certainly be back.

  14. It is in point of fact a nice and useful piece of info. I’m glad that you simply shared this helpful info with us. Please keep us up to date like this. Thank you for sharing.

  15. Pingback: sale cialis
  16. Pingback: buy viagra pfizer

Leave a comment

Your email address will not be published.