Aug 10
29
Short Sale or Bankruptcy
Why you should short sale your home even if your are filing Bankruptcy
Chapter 7, 11 or 13
The way to determine if you should do a short sale while in bankruptcy is to ask yourself this one simple question; Even though my credit is going to be damaged now, do I want to own a home again sometime in the future?
If the answer is yes, then you should seriously consider the idea of doing a short sale regardless of a bankruptcy filing.There are several good reasons that you should consider a short sale over letting it go to foreclosure. For instance most lenders require 24 months from a foreclosure before you can get a mortgage.
*UPDATE*
[As of 2008, Fannie Mae and Freddie Mac are now indicating that they will have new guidelines for those who have had a foreclosure or a short sale. The statement says:
Fannie Mae will now prohibit foreclosed borrowers from getting another mortgage through the giant investor for five years.
If there are “documented extenuating circumstances.” the mortgage prohibition is for three years.
After five years, borrowers with foreclosures in their files will have to put at least 10 percent down and need minimum FICO credit scores of 680.
Freddie Mac will now prohibit foreclosed borrowers from getting another mortgage for seven years.
The company also claims they will “aggressively pursue walkaways to preserve our deficiency rights” where permitted by state law.
While they have not indicated yet what the rules will be for a short sale, in the past they have been as much as half the waiting period for a foreclosure. Previous guidelines called for a 1 year waiting period before a mortgage could be obtained after a short sale. It’s probably more like two but then you are back in the market buying at today’s bargain prices!
