| If you can no longer pay your mortgage and selling | | | | payments on time and try and reduce the outstanding |
| your home is the only way out, the two ways this can | | | | balance to zero. |
| be done are via foreclosure or through a short sale. | | | | The real disadvantage of a short sale is that the price |
| Many people prefer a short sale because they are | | | | will usually be below market value, but a foreclosure |
| selling the home as opposed to it being sold from | | | | auction will normally do no better. The remaining portion |
| under them. | | | | of the mortgage will be yours to pay off via other |
| On the other hand, from the lenders prospective, they | | | | means. |
| look at short sales and foreclosures as more or less | | | | A plus is keeping control of the sale and not handing it |
| the same thing. It is still the sale of a home for the | | | | over to the bank. These sales are treated like any |
| means of paying off the mortgage. | | | | home sale. Credit bureaus don't show short sales on |
| If you foreclose, this record will remain on your record | | | | your credit rating, but rather as a 'paid as agreed' or |
| against you for a period of up to ten years, making it | | | | 'paid as less than agreed'. |
| extremely difficult to enter new loans. You will need to | | | | If foreclosure seems imminent, any other option is |
| work hard to rebuild your credit rating. | | | | normally better as it takes longer to recover from a |
| Short sales are an option before the home gets to the | | | | foreclosure than anything else. Your ability to enter |
| foreclosure process. Bear in mind that short sales will | | | | other loans will be impaired for many years to come. |
| still negatively affect your credit score though; at times | | | | In a nutshell, if refinancing isn't an option for you, than a |
| dropping it to as low as 200. One advantage to a | | | | short sale may be the better option. It shows lenders |
| short sale though, is your credit rating can recover | | | | you are trying to resolve the problem and it will not |
| from a short sale faster than from a foreclosure. | | | | remain on your credit history for the same length of |
| Any credit cards that are currently still being used are | | | | time. |
| a good way to rebuild your credit score. Make | | | | |