Parker & Associates, P.A.

Parker & Associates, P.A. is a full-service residential and commercial real estate law firm

What Is The Difference Between A Short Sale And A Foreclosure

If financial hardship has made it impossible for you to remain in your home, you have two options - Short Sale or Foreclosure.

This summary will help you understand the consequences of these two processes.


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:

  • Documented proof of financial hardshipRecent sale prices of comparable homes
  • The lender must then approve the short sale before you can list the home and each offer must be reviewed by the lender before you can accept it and close on the sale.

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.


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



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