El Dorado Hills Real Estate
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Pete Schwieder Real Estate

Short Sales


Short Sale vs Foreclosure

What you need to know in making a decision of a Short Sale vs Foreclosure

The facts identified below, clearly explains the possible effects a short-sale or a foreclosure could have on a homeowner. Many distressed homeowners are not aware of short-sales. Please refer to your Attorney, CPA or Financial advisor to review your particular financial situation.

A short-sale is a home sale that is negotiated with the mortgage company, in which the lender takes less than the amount owed.

The earlier a homeowner does something, the more options they might have. If you have further questions I encourage you to give me a call. I would be more than happy to explain the pros and cons of both options.


Area of Concern Short Sale Foreclosure Comments
My ability to purchase and secure a loan with another property in the future (primary residence)
After two years, you would be eligible to apply for a Fannie Mae insured loan
After seven years, you would be eligible to apply for a Fannie Mae insured loan
You may be eligible for Fannie May loan, with restrictions after five years with a Foreclosure
Credit Reporting and History
Lending institutions will usually (not always) report the property short sale to the credit agencies. If the data is submitted, the report remains on file for a period of three years
Lending institutions will report the property Foreclosure to the credit agencies. The report remains on file for a period of ten years
The Foreclosure report will be provided to the credit agencies and remain on file for a period of ten years
How will my Credit Score be affected?
50 to 110 points for a period of least 1 year
200 to 300 points for a period of at least 3 years
Your credit score will be affected with either alternative, Why not minimize the number of points that your credit would be affected
Statute of Limitations of duration of the negative credit reporting
3 Years
10 Years
Impacts the ability to obtain credit or credit at desires rates
Deficiency Judgment
Should there be a Deficiency Judgment, the Seller/Homeowner (with the assistance of the Agent) and the Lending institution negotiates this amount
The Lending institution determines if and when to file a deficiency judgment
In a Foreclosure situation, the Seller/Homeowner does not negotiate with the Lending institution