A “Short Sale” is a much better alternative to Foreclosure or a Deed-in-Lieu of Foreclosure, and will do less harm to your credit and future ability to borrow. A Foreclosure will remain on credit reports for seven to ten years. It usually takes 5 years before new mortgages maybe obtained, with 7 year lending restrictions. With a short sale, however, you may be able to purchase a new home in 2 years or less. Further, a “Foreclosure” on your credit will require you to answer certain questions on applications, such as for new loans or even employment with a “YES, I have had a foreclosure”.
Thus, if you own San Jose real estate to Cupertino to San Francisco to Sacramento, California, and you are considering the alternatives, remember that a Short Sale may save your future ability to borrow. And, importantly, you are taking action and solving your predicament in a forthright manner, versus having your lender “take” your property in foreclosure, or giving it back in a deed-in-lieu of foreclosure.