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Alan Russell

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Short Sale vs. Foreclosure

1. The upside down house debt is erased in most cases. If you are selling because of a financial hardship, then the upside down house debt will be automatically erased in most cases. If your loan is owned or insured by the following agencies: Fannie Mae, Freddie Mac, FHA, USDA, and/or VA; their policies state that your short sale debt will be erased completely.

2. You are eligible to buy another home much sooner compared to a foreclosure.The most common loan programs, Fannie Mae and FHA, stipulate that you can buy another home under their programs in about 2 years.

3. Short Sale is at No Cost To You. That is right. A short sale costs you nothing. ALL the selling expenses are paid by your lender. That includes the title insurance, attorney fees, and agent commissions.

4. Your credit suffers much less much less damage. Many people think that a short sale will be the kiss of death to their credit. The opposite is true. That is the one big advantage of a short sale over a foreclosure. And your credit rebounds much more quickly with a short sale versus foreclosure. The other benefit is that you will have less debt. (More debt hurts your credit score.) You will have a lower debt to income ratio, which will actually boost your credit.

In a couple of years or less, your credit will be back to normal and you can buy another home.

5. You can often rent a comparable house for less than your former mortgage payment. I often see homeowners rent larger, nicer homes for less money in the very same areas they short sold .

6. You avoid the humiliation of a foreclosure. Neighbors know when foreclosure occurs. Not so with a short sale. With short sale, your listing looks like all the other normal listings in the neighborhood.

7. You don’t have to pay rent during the short sale process. Most short sales take 3 to 12 months. Most people stop making their mortgage payments during the short sale process. You can use the savings to relieve other financial pressures.

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