Significant financial burdens are never a good experience for anyone. Out of all the major ones, none are quite as scary as the possibility of a foreclosure. Fortunately, there are options for those struggling to make a mortgage payment, and one of the best avenues you can take is a short sale. If you can manage to short sell your home instead of foreclosing on it, you will be able to reap quite a few valuable benefits. Here’s a list of the main reasons you should choose this option.
Short Selling Doesn’t Hurt Your Credit Score As Badly
Some people think that short sales and foreclosures have the same negative effect on your credit history, but this isn’t the case. Even though short sales can hurt your credit score, the reduction from them isn’t nearly as drastic, and they disappear from your report after about two to three years.
On the other hand, foreclosures can negatively affect your credit report for seven to 10 years. Plus, they will be a part of your permanent public record, meaning they will never truly go away.
It Will Help You Recover Faster Financially
Thanks to the shorter lifespan of a short sale on your credit history, it’ll be much easier for you to quickly recover from this setback. Once it’s off your report, it will become possible to take out a loan again, letting you buy a new home much faster than you could have after a foreclosure.
On top of that, you won’t have to pay as much during the process of losing your current home. For foreclosures, you’ll have to pay a sizable penalty out of pocket. Since the bank won’t be getting any money for taking your house from you, they will be adamant about getting that cash, leading many people to bankruptcy.
Since the bank will receive most of the money owed on the home in a short sale, they’ll rarely hound you about the remaining balance. They will recoup most of the money that they would have never seen during a foreclosure. Because of this, you will essentially break even, giving you a better starting point for financial recovery.
Short Sales Have Fewer Scam Issues
The last benefit to short selling your home over foreclosing is the fact that you will avoid potential scams. Scammers prey on those who are most vulnerable. Unfortunately, many people who just went through a foreclosure are at the lowest points of their lives, increasing their chances of making a bad decision. Scammers often try to take advantage of that fact.
Since people who short sell their homes seem a bit more on top of things, fewer scammers want to waste their time on someone who isn’t as desperate. Even though the ideal scenario would be finding a way to stop scammers altogether, the best option for you in this scenario is to pick the choice that helps you avoid them.