A short sale is the sale of a home for less than the balance remaining on your mortgage. If your mortgage company agrees to a short sale, you can sell your home and pay off all (or a portion of) your mortgage balance with the proceeds.
○ Eliminate or reduce your remaining mortgage debt
○ Assistance for relocation may be available
○ Start repairing your credit sooner than if you went through a foreclosure
○ May be able to get another Fannie Mae mortgage to purchase a home sooner (in as little as 2 years) than if you went through foreclosure (up to 7 years)
With a Mortgage Release (Deed-in-Lieu of Foreclosure), you transfer the ownership of your property to the owner of your mortgage in exchange for a release from your loan and payments.
○ Eliminate your mortgage debt
○ May be eligible for up to $3,000 in relocation assistance
○ Start repairing your credit sooner than if you went through a foreclosure
○ May be able to get a Fannie Mae mortgage to purchase a home sooner (in as little as 2 years) than if you went through foreclosure (up to 7 years)
○ Have flexibility and control over exiting your home—choose to vacate immediately, stay for up to three months (without paying rent), or lease the home for up to one year
A foreclosure is the legal process where your mortgage company obtains ownership of your home (i.e., repossess the property). A foreclosure occurs when the homeowner has failed to make payments and has defaulted or violated the terms of their mortgage loan.
○ Eviction from your home—you’ll lose your home and any equity that you may have established
○ Stress and uncertainty of not knowing exactly when you will have to leave your home
○ Damage to your credit—impacting your ability to get new housing, credit, and maybe even potential employment, for many years
○ May owe a deficiency balance after the foreclosure sale
○ Lose any relocation assistance or leasing opportunities that may be available with other options
○ Forfeit ability to get a conventional mortgage to purchase another home for up to 7 years