Choosing the Lesser of Two Evils
If you can no longer afford your mortgage payments and your home is worth less than what you owe, you are facing two primary exit strategies: a short sale or a foreclosure.
The Impact on Your Credit Score
Foreclosure: A foreclosure is devastating for your credit report. It will drop your score significantly and remains on your record for 7 years.
Short Sale: A short sale will also damage your credit, but typically less severely than a foreclosure. More importantly, you can often qualify to buy another home in just 2 years instead of 7.
Deficiency Judgments
In Florida, if a bank forecloses and the auction price doesn't cover the loan balance, the bank has the legal right to sue you for the difference (deficiency judgment).
In a short sale, a skilled Realtor and negotiator can often get the lender to explicitly waive their right to a deficiency judgment in writing.
The Verdict
A short sale is almost always better than a foreclosure. You retain control of the process and protect your future ability to buy a home. If you are behind on payments in Tampa Bay, contact Sean Tennant to evaluate your short sale options today.