When you are facing the loss of your home through foreclosure, you might come to the realization that can't find a way to keep it. Instead of just taking the foreclosure for granted, you might be able to sell the home through a short sale. When the home is sold through a short sale, you can actually reap several benefits.
One of the main benefits of a short sale is that isn't reported on your credit report -- unlike a foreclosure, which is. A foreclosure will remain there for ten years, and it can mean a huge hit of around 250 to 300 points to your credit score. That negative impact usually remains for around three years.
Another benefit of a short sale is that you aren't responsible for the remaining balance of the loan afterwards. Instead, the bank forgives any remaining balance. This can help you to have greater financial security after the transaction is complete.
With a short sale instead of a foreclosure, your ineligibility for a Fannie Mae loan is much shorter. A short sale only excludes you from Fannie Mae loans for two years, but a foreclosure prevents you from being eligible for a Fannie Mae loan for five years.
If you are facing the loss of your home and are considering a short sale, you should learn exactly how these transactions work and the exact way that choosing a short sale could affect you. An Arizona real estate attorney can advise you on your legal rights and responsibilities so that you can ensure that you are on the right path.
Source: Westmarq Real Estate Group, "Benefits of a short sale," accessed July 29, 2016