Comparing the Effects of Colorado Short Sales V. Foreclosures
| Issue | Foreclosure | Successful Short Sale |
|
Credit Score |
Score may be lowered anywhere from 250 to over 300 points. Typically will affect score for over 3 years. |
Only late mortgage payments will be reported as paid or negotiated after the Short Sale. This will lower the score as little as 50 points, if all other payments are being made. A Short Sale’s affect can be a brief as 12 to 18 months. |
|
Applying for a mortgage loan from any lender |
When applying for a mortgage loan, if your home has been foreclosed upon, you will have to answer YES when you’re asked if you’ve had a foreclosure. This applies for 7 years, and affects mortgage rates. | T
he standard mortgage application doesn’t ask about short sales. |
|
Your credit history |
A foreclosure remains on your credit history for 10 years or longer. |
A short sale is not reported on your credit history. The mortgage will usually be shown as settled or paid in full. |
|
Current Employment
|
Employers have the right to check credit regularly, if in a sensitive position. Many employers do check regularly. A foreclosure in many cases is grounds for immediate reassignment or termination. |
A Short Sale is not reported on a credit report and is therefore not a challenge to employment. |
|
Future Employment |
Employers often require credit checks on job applicants. A foreclosure is one of the most damaging items you can have on your credit report. It may be prevent you from getting the job. |
A Short Sale is not reported on a credit report so it does not affect your future employment. |
|
Security clearance |
If a client has a foreclosure and is in a position that requires a security clearance (i.e. police officer, military, security, etc.) in almost all cases clearance will be revoked and their position will be terminated. |
A Short Sale on its own does not challenge most security clearances. |
