Greg Cowart on Zillow
Greg Cowart - Mortgage Broker or Lender at The Securus Group
Greg Cowart - Roseville Loan Guy

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Foreclosure vs Short-sale… Are you being fed bad information???

A lot people call me each month to let me know that a short sale is much better on your credit than a foreclosure and that it will not delay buying another home. While it is true that a short sale can be a little easier on your credit score, it will be treated the same way as a foreclosure on your credit would be when you want to purchase a home. As with all situations, there are varying rules for each individual borrower and it’s true that FHA does not automatically disqualify someone from obtaining an FHA insured mortgage for any period of time after that person goes through the short-sale process, but keep in mind, FHA does not make loans, banks do. Every bank has their own guidlines overlayed onto every situation.

While I believe a short sale is a much better situation for our local economy as a whole it is not a guarantee that the seller can run out and buy another home today. In fact it’s quite the opposite: IF you were not forced from your existing home due to a job transfer or dramatic illness and therefore proceeded with a short sale, you are probably not going to get a new home loan for a MINIMUM of 24 months and more realistically 36 months.

Why am I harping on this issue so much? There is a lot of bad information being thrown around in the local real estate and mortgage world, especially in marketing (suprise suprise). Those of us that are “teachers” in the Sacramento real estate and mortgage land need to regain the trust of the home buying/borrowing community. Over the last few years, many in the general public feel they have been taken advantage of by lenders, realtors and just about everyone else. Now is a time to give good, honest advice to people: Even if it is not exactly what they want to hear and it does not meet their immediate goals.

I’m confident that as time rolls on, we will see a softening of these rules. Please feel free to call me with any questions.

3 comments to Foreclosure vs Short-sale… Are you being fed bad information???

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