I've been asked many times what the difference between a short sale and foreclosure is to someone's credit? Both severely impact the homeowners credit score for the worse. With a short sale/deed in lieu of foreclosure the homeowner will not be able to secure a Fannie Mae or Freddie Mac backed home loan for 4 years, with a foreclosure that number jumps to 5 years. Ginnie Mae (FHA) loans require a 3 year wait. Over the past year these requirements have increased and it's possible they could again. The bottom line is that if you short sell your house or let it go into foreclosure you'll have to wait at least 3 years before you'll be able to purchase a new home.
Michael G Regan is a Mortgage Banker and FHA Specialist in Petaluma California. He specializes in Marin, Sonoma, and Napa counties. You can reach him at 415-672-2499 or online at www.MichaelGRegan.com
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