Why do homeowners choose Short Sales over Foreclosure?
There are many reasons why a homeowner would want to do a short sale to avoid foreclosure. Many just can’t afford their mortgage anymore. Today we’ll briefly cover two main reasons homeowners have an interest in completing a short sale vs. a foreclosure.
One reason a homeowner typically chooses a short sale over a foreclosure is to retain some of their credit. Their credit WILL take a hit with a short sale, but typically most homeowners can recover from a short sale in 2-3 years, whereas a foreclosure could tank a homeowner’s credit for up to 7-10 years. Another reason why homeowners opt to do short sales over foreclosures is there still are SOME government programs that allow a homeowner to receive a moving incentive. Although this is nominal, it is something for most homeowners who truly have no funds to move.
We don’t promise homeowners any funds. To be truthful, we can’t always gauge when a homeowner will or won’t receive an incentive to do a short sale. It’s best to understand that most lenders don’t allow moving incentives, but at the time of this post, Freddie Mac, Fannie Mae, FHA, and VA short sales still do allow for a nominal incentive.
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