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Which one is least damaging in terms of overall consequences: a short sale or a foreclosure?....Our house has been on the market since January, we have lowered our price multiple times and due to a significant change in our monthly income can no longer make our monthly payment. We have contacted our lender several times and they turned down our requests to refinance and/or adjust our monthly mortgage so we applied for a short sale and have been waiting for an offer. Foreclosure proceedings have begun and our house is scheduled for public auction on Dec. 17, however today we were given our first and only short sale offer. Now we don't know what to do because we have been advised that both a foreclosure and short sale can have serious consequences. Is one really better than the other? It seems like the short sale has some drawbacks as well. We're in Oregon by the way. Thank you very much for any info.

bearboysj · Joined: 25 Oct 2008 Posts: 42 17.02 Dollars($)

The effect of a short sale is identical to that of a foreclosure.. The tradeline on your credit report will show up as a 'pre foreclosure' in redemption status - this can ultimately reduce your score 200-300 points.

The ONLY Benefit of a shortsale to date is the seasoning period to purchase another property - typically foreclosure periods will last 4+ years to see any kind of decent interest rate if you can even get approved. Some lenders see short sales a little less derog and will sometimes make exceptions for less seasoning time - as long as you have A++++ credit since the short sale.

Jessica

Hi Guest,

As much as I know of, short sale is better than a foreclosure considering the credit effects. And yes, I'd agree with Bearboysj. If you go for a short sale, it'll take less time for you to qualify for another mortgage at better rates of interest unlike in foreclosure.

To know about short sale credit effects, refer to the information available on this topic.

Regards,

Jessica.

jameshogg · Posted: Thu Oct 30, 2008 10:58 pm Post subject:

Hi Guest!

Both short sale and foreclosure will have certain implications on your credit report and credit score. A foreclosure will remain on your credit report for 5 years from completion date where as a Short sale will remain for 2 years from completion date.

The FICO score will drop down by 75-100 points if you do a short sale but it may reduce by 250 points if you're on a foreclosure.

Thanks.

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