Many homeowners are in danger of losing their home and now more than ever the terms “foreclosure” and “pre-foreclosure” or “short sale” are being used commonly. So what are the differences between these two situations?
One of these situations have less of an effect on your credit score than another – but overall, they both will inflect some type of dip in your scoring. Home foreclosures can affect your credit scores drastically and drop a consumer’s credit score somewhere between 250 to 280 points. Whereas a real estate short sale will show on your credit but may have a smaller change on credit scores, between 80 to 100 points.
The difference in timeline to purchase a home after a foreclsoure is on average five to seven years, where a short sale will generally be half theat time to get a decent interest rate offered by a mortgage lender.