Chicago Real Estate with Roy Hollis

FORECLOSURE VS. SHORT SALE
FORECLOSURE

In order for your lender to foreclose on you in Illinois they will have to take you to court and if you are foreclosure on you will have a judgment against your credit. This judgment can remain your credit record for up to ten years and also in most cases you will have a deficiency judgment against you. A deficiency judgment is another lien against the borrower whose foreclosed sale did not produce sufficient funds to pay the mortgage in full. In other words when your mortgage company eventually sells your property and it did not cover the cost of foreclosure and your remaining balance of what you owed on the property they have the right to go after you to get the money. Your credit score will also drop 300 point because of the foreclosure in most cases but that does not include the multiple 30 day lates that occur during the foreclosure process. You will also have to wait around 7 years before you can purchase another property again.

SHORT SALE

There is not a judgment against you when you do a short sale however some lenders may ask to reserve the right of a deficiency judgment against which is negotiable in some cases. If you have been late on your mortgage, that will affect your credit but you do not have to be late on your mortgage to do a short sale. I encourage you to try and stay current with your mortgage especially if you are concerned with how a short sale will affect your credit. Typically your credit will drop around 100 points when you do a short sale. After you do a short sale you can purchase a property right away if you are not trying to do a Fannie Mae loan which requires you to wait 24 months.