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Why would a short sale be preferable to a
foreclosure?
Short sales are considered preferable to foreclosures because
short sales won’t damage the homeowner’s credit as much as a
foreclosure. For example, if the borrower is still current with
other payments, a short sale my lower the borrower’s credit score by
as little as 50 points, whereas a foreclosure could lower the credit
score by as many 200 or more points. Additionally, with a short
sale the lender could report to the credit bureaus in one of three
ways;
1. Paid in full-paid as agreed
2. Paid–settled
3. Paid–unrated. If the borrower is foreclosed on, that
foreclosure
will remain in public record and credit history for seven
years.
How do I know if I
qualify for a Short Sale?
Not every homeowner is a candidate for
a short sale. There are several criteria to qualify for a short
sale:
-
Whether or not the
homeowner has a valid hardship.
-
Whether or not there is
sufficient time to accomplish a short sale.
-
The amount that is owed
on the property
-
Whether or not the
homeowner has liens in addition to the mortgage (examples: tax
liens, homeowner association liens)
-
The condition of the
property
-
That the homeowner will
be cooperative in completing the short sale documentation and in
maintaining the property for showings.
What is a valid hardship?
There are numerous situations that will constitute a valid
hardship.
1.
Job Loss
2.
Business Failure
3.
Military Transfer
4.
Separation from Spouse
5.
Incarceration
6.
Illness and Medical Costs
7.
Divorce or Death of a Spouse
8.
Natural Disasters
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