 What You Should Know Before Buying a Home
Your Credit Score
A credit score may be lowered anywhere from 250 to over 300 points in a foreclosure. Typically a foreclosure will affect credit score for over three-four years. Only late payments on a mortgage will show and after a short sale, mortgage will be reported as paid or negotiated. This will lower the score as little as 50 points if all other payments are being made. A short sale’s effect can be as brief as 12 to 18 months. Your Credit History Foreclosure will remain as a public record on a person’s credit history for ten years or more. A Short sale is not reported on a credit history. There is no specific reporting item for ‘short sale.’ The loan is typically reported as, ‘paid in full, settled.’ Your Future Loan with any Mortgage Company On any future 1003 application, a prospective borrower will have to answer YES to question C in Section VIII of the standard 1003 loan application that asks “Have you had property foreclosed upon or given title or deed in lieu thereof in the last seven years?” this will affect future rates. There are no similar declarations or questions regarding a short sale. Future Fannie Mae Loan – Buying a Primary Residence A homeowner who loses a home to Foreclosure is ineligible for a Fannie Mae backed mortgage for a period of five years. But after a short sale a homeowner can still buy a home. A successfully negotiated and closed short sale will be eligible for a Fannie Mae backed mortgage only after two years. Future Fannie Mae Loan – Buying a Non-Primary An Investor who allows a property to go into foreclosure is ineligible for a Fannie Mae backed investment mortgage for a period of seven years. An investor who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed investment mortgage after only two years. For Your Security Clearances Foreclosure is the most challenging issue against a security clearance outside of a conviction of a serious misdemeanor or felony. If a client has a foreclosure and is a police officer, in the military, in the CIA, Security, or any other position that requires a security clearance in almost all cases clearance will be revoked and their position will be terminated. A shortsale alone does not challenge most security clearances. Your Current Employment Employers have the right and are actively checking the credit regularly of all employees who are in sensitive positions. A foreclosure in many cases is grounds for immediate reassignment or termination. A short sale is not reported on a credit report and is therefore not a challenge to employment. Your Future Employment Many employers are requiring credit checks on all job applicants. A foreclosure is one of the most detrimental credit items an applicant can have and in most cases will challenge employment. A short sale is not reported on a credit report and is therefore not a challenge to employment. Your Deficiency Judgment In 100% of foreclosures (except in those states where there is no deficiency), the bank has the right to pursue a deficiency judgment. In most successful short sales it is possible to convince the lender to give up the right to pursue a deficiency judgment against the homeowner. Additional benefits of a short sale: Service fee is FREE to homeowner(s). Homeowner gets to stay in their home during the short sale process timeline. Lenders may offer relocation money to a homeowner. Stress-free credit and financial future. And most of all...Regain peace of mind! |
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