Avoid Foreclosure And Limit Credit Damage

The amount of credit damage after a short sale is different with each homeowner.A large part of credit damage comes from many months of missed payments.Every missed payment drops your credit score.  These missed payments can add up to a larger drop on your credit score than the actual short sale. 

This is why it’s very important to complete the short sale transaction in a timely manner.   Closing the short sale and avoiding missed payments results in less credit damage. 

Is homeownership important to you? 

If the answer is yes then a short sale can help. One of the important benefits of a short sale is the ability for the homeowner to qualify for a mortgage in a shorter period of time.

For borrowers with a foreclosure, short sale, or deed in lieu of foreclosure on their credit history, the following time lines apply before they’ll be eligible for a conforming, conventional mortgage (Fannie Mae/Freddie Mac):

·         Foreclosure: 5 years from completion date, minimum 680 FICO with a minimum 10% down payment for 7 years.  Investment properties, second homes, and cash out refinances will not be permitted for 7 years.

·         Deed-in-Lieu of Foreclosure: 4 years with a 10% down payment requirement for 7 years.

·         Short Sale: Only 2 years for Fannie Mae, and 4 years for Freddie Mac.  Under FHA rules you have to wait only two years before you qualify for a Fannie Mae loan again. 

As stated above, a key to limiting credit damage is closing the short sale before missed payments start to pile up.  One tip for homeowners is to look for a real estate investor to purchase the property.

How do you find a local real estate investor?

It’s actually very easy.Search Google or Yahoo for terms such as “foreclosure” or “short sale” and your city or state.  For example, if you search Kansas City Short Sale you’ll find NewDawnREInvestments.com.  Or  Lancaster Foreclosure for a PA based investor such as lancasterpaforeclosedhomes.com.  And Southern California Short Sale for and investor such as FreedomShortSaleBuyers.com.  This search tip can work in any area.  Investors are out there and they may be able to help a distressed homeowner avoid foreclosure and salvage their credit.