This summary will help you understand the consequences of these two processes.
SHORT SALE
A short sale is a transaction in which the lender has agreed to accept less money than they’re owed on the mortgage loan. If you need to sell your home, but you owe more than the home is worth, this may be a good option for you.
In order to qualify for a short sale, you must first provide your lender with:
If you manage to avoid late mortgage payments, a short sale can reduce your credit score by as little as 50 points. Late payment, however, can result in drops of as much as 200 points.
Depending on your credit score, you may be able to get another home loan in as little as 2 years, if you can afford to put down 20%, or4 years, if you can only put down 10%.
You may also be taxed on the portion of the loan that was forgiven, so check with your tax preparer.
FORECLOSURE
Whether you owe more than your home is worth or not, if you stop paying your mortgage, foreclosure is inevitable.
If you miss one mortgage payment, you are in “default” and you will receive a notice of default from your lender if you are more than 30 days late. If you miss more than one payment, the lender will eventually notify you that they will begin the foreclosure process.
Unlike a short sale, the missed mortgage payments that will result in a foreclosure, can cause your credit score to go down by as much as 400 points and it can take up to 7 years to get another home loan after a foreclosure.
Foreclosure processes are different in every state, if you would like to read more about the foreclosure laws and processes in Florida, visit http://www.foreclosurelaw.org/Florida_Foreclosure_Law.htm.
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Parker & Associates, P.A.
1800 Second Street, Suite 700
Sarasota, FL 34236
PH: 941-952-0600
FAX: 941-952-0601
General Contact
Ted Parker
Kathy Morgan
Real Estate Trust
Short Sale Negotiations
Corporate Law
Estate Planning
Landlord Tenant
Probate
Information on this web site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us for more information however contacting through the site us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.
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