Short Sale vs. Foreclosure?
You make the call!
I get the question from people all the time: short sale or foreclosure, which is the better option? My knee-jerk reaction is always “Are you kidding? Short sale, of course!” This has been mostly because I was always under the impression that a short sale, although still a ding on your credit, was gentler on the score than a foreclosure.
But according to a recent blog post by FICO Banking Analytics, there is no real difference in the affect a short sale or a foreclosure has on your credit score. Both the impact in points and the time to fully recover is about the same for both events.
This put me in a precarious situation. All this time I had lauded the short sale as vastly superior to foreclosure, largely because of its less adverse affects on credit. So I was forced to do further research into which was the better option. In doing so I learned about benefits of a short sale I wasn’t even aware of, and found that the FICO blog was way off.
Each borrower’s credit situation is different, and the way that a creditor reports a short sale to bureaus is different. The reality is that hundreds of thousands of distressed homeowners who have chosen a short sale have experienced a lesser impact on their credit than those who have chosen foreclosure.
In a short sale, a distressed homeowner may be able to obtain another mortgage sooner than someone who has a foreclosure on his or her record. Also, more and more employers pull credit before hiring a potential employee, and a foreclosure can keep you from getting a job. Some employers pull credit reports on existing employees, and a foreclosure may not bode well in certain industries.
These benefits stacked against the negatives of foreclosure, including the embarrassment of public announcement and literally being kicked out of your home, make, in my opinion, short sale the reigning champion.
Now you make the call!
If you would like a confidential appointment about your best financial options, contact me today.
Sunday, June 26, 2011
Sunday, February 6, 2011
5 Steps to a Successful Short Sale
Solving Your Mortgage Crisis Just Got Easier
5 Steps for a Successful Short Sale
Lenders and the federal government, prompted by the sheer volume of loan modification and short sale requests, have overhauled their systems and programs, making the foreclosure avoidance process much easier than in the past.
If you are considering short selling your home to avoid the financial and emotional fallout of foreclosure, you should be aware of the five steps you should take to increase your chances of a successful transaction.
First, do you qualify?
You must:
1. Have a verifiable hardship, like unemployment, medical bills, or relocation
2. Must have a monthly income shortfall
3. Be insolvent (you have no cash or assets that can be sold to pay down the mortgage), or headed towards insolvency
If you meet these qualifications, follow these five steps to a successful short sale:
1. Contact me so we can identify your servicer, fill out a short sale packet for the lender, and assemble all the required information needed to list your home for sale
2. Gather financial information (i.e., bank statements, pay stubs) from at least the last three months
3. Keep your house in showcase condition for showings, and make as many repairs as necessary and that you can afford
4. Expect the lender, junior lien holders, and private insurance companies to request more paperwork, and try to gather requested information quickly to ensure transaction efficiency
5. Set realistic expectations and work with me, the lender, and the buyer to the satisfaction and benefit of all parties involved
For more information about how the short sale process works, or about any other foreclosure alternatives you may qualify for, call me today. I can help you alleviate the burden that the threat of foreclosure brings, and we can develop a strategy to help you breathe a little easier.
5 Steps for a Successful Short Sale
Lenders and the federal government, prompted by the sheer volume of loan modification and short sale requests, have overhauled their systems and programs, making the foreclosure avoidance process much easier than in the past.
If you are considering short selling your home to avoid the financial and emotional fallout of foreclosure, you should be aware of the five steps you should take to increase your chances of a successful transaction.
First, do you qualify?
You must:
1. Have a verifiable hardship, like unemployment, medical bills, or relocation
2. Must have a monthly income shortfall
3. Be insolvent (you have no cash or assets that can be sold to pay down the mortgage), or headed towards insolvency
If you meet these qualifications, follow these five steps to a successful short sale:
1. Contact me so we can identify your servicer, fill out a short sale packet for the lender, and assemble all the required information needed to list your home for sale
2. Gather financial information (i.e., bank statements, pay stubs) from at least the last three months
3. Keep your house in showcase condition for showings, and make as many repairs as necessary and that you can afford
4. Expect the lender, junior lien holders, and private insurance companies to request more paperwork, and try to gather requested information quickly to ensure transaction efficiency
5. Set realistic expectations and work with me, the lender, and the buyer to the satisfaction and benefit of all parties involved
For more information about how the short sale process works, or about any other foreclosure alternatives you may qualify for, call me today. I can help you alleviate the burden that the threat of foreclosure brings, and we can develop a strategy to help you breathe a little easier.
Saturday, February 5, 2011
Getting Your Credit Back
Here is a great article from my Business Partner, Brad Rhodes, on how to restore your credit. I will from time to time post articles written by Brad to help my friends, family, and clients learn how to repair credit issues. Please do not hesitate to contact me at Eve@EveFriske4RE.com or call me at 949-315-1202 with any questions.
How Credit Is Counted - some helpful tips
HOW CREDIT IS COUNTED
• 35% Payment history
• 35% Amounts owed
• 15% Length of credit history
• 10% New credit
• 10% Type of credit
Stay away from small department store cards; they have a low limit and tend to bring down your overall score
You must use credit in order for it to report to the bureaus
If you do not use a card it may be cancelled by the bank – this WILL hurt your score
Never use more than ½ of your available credit line
Ask for line increases
How Do They Calculate a Credit Score?
Different credit bureaus calculate your Fico or Beacon Score slightly different. Each credit bureau makes the score their own and gives it a different name. Equifax calls the score a Beacon Score, Experian calls it a Fair Isaac Score and Transunion calls it an Empirica Score. Every time something changes on your bureau, your score will change. A lot of information is used to calculate your score; however, there is no formula that has ever been given to the public. Lenders will look at your score along with your income and the kind of loan you are applying for to determine interest rates.
Improving Your Credit Score
Now that you know how your score is calculated, you can begin making changes.
• Pay your bills on time. This sounds simple, but this is the biggest thing you can do to keep your score high. Delinquent payments and collections have a major negative impact on your score.
• Keep your balances low on unsecured revolving debt like credit cards. High balances still owed can affect a score.
• The amount of unused credit is an important factor in calculating your score. You should only apply for credit you need.
• Make sure the information on your credit report is correct. If it is not, dispute it with the Bureau Company or lender directly.
• Removing negative accounts on your credit report has the biggest impact on your score.
Generally negative things can stay on your credit for 7 to 10 years. But you can hire a professional credit repair service to do it for you.
http://gettingbackmycredit.com/
How Credit Is Counted - some helpful tips
HOW CREDIT IS COUNTED
• 35% Payment history
• 35% Amounts owed
• 15% Length of credit history
• 10% New credit
• 10% Type of credit
Stay away from small department store cards; they have a low limit and tend to bring down your overall score
You must use credit in order for it to report to the bureaus
If you do not use a card it may be cancelled by the bank – this WILL hurt your score
Never use more than ½ of your available credit line
Ask for line increases
How Do They Calculate a Credit Score?
Different credit bureaus calculate your Fico or Beacon Score slightly different. Each credit bureau makes the score their own and gives it a different name. Equifax calls the score a Beacon Score, Experian calls it a Fair Isaac Score and Transunion calls it an Empirica Score. Every time something changes on your bureau, your score will change. A lot of information is used to calculate your score; however, there is no formula that has ever been given to the public. Lenders will look at your score along with your income and the kind of loan you are applying for to determine interest rates.
Improving Your Credit Score
Now that you know how your score is calculated, you can begin making changes.
• Pay your bills on time. This sounds simple, but this is the biggest thing you can do to keep your score high. Delinquent payments and collections have a major negative impact on your score.
• Keep your balances low on unsecured revolving debt like credit cards. High balances still owed can affect a score.
• The amount of unused credit is an important factor in calculating your score. You should only apply for credit you need.
• Make sure the information on your credit report is correct. If it is not, dispute it with the Bureau Company or lender directly.
• Removing negative accounts on your credit report has the biggest impact on your score.
Generally negative things can stay on your credit for 7 to 10 years. But you can hire a professional credit repair service to do it for you.
http://gettingbackmycredit.com/
Subscribe to:
Posts (Atom)
