If you’re a homeowner who is struggling to make mortgage payments, you may be considering assistance options. The two most common are short sale and foreclosure. How do they differ, and which one is more beneficial? Let’s take a closer look at the primary differences between them.

1. The ability to buy a house in the future

In a foreclosure, homeowners may have to wait 7 to 10 years to qualify for a new mortgage. Mortgage lenders will tell you, with a short sale, homeowners are generally able to qualify for a home loan after just 2 to 3 years.

2. The effect on credit score and credit history

There is a lot of misinformation about this topic, and some people claim there is no difference in the effect on a homeowner’s credit. The fact is, in most cases, a short sale will have less of an impact on credit than a foreclosure would. And while a foreclosure is part of permanent public record and can remain in credit history for up to a decade, a short sale usually remains on a homeowner’s record for much less time… usually, just two to three years.

3. The effect on current and future employment

Many employers review credit upon employment of a new hire, and continue to check the credit of existing employees. So whether a homeowner is applying for a new job or staying with their current one, a foreclosure can be detrimental to employment. Short sales, on the other hand, should not specifically challenge employment on their own.

4. Possible effects on security clearances

This is important if your employment involves some sort of security clearance or security check, and there are many industries that require this nowadays. A foreclosure is one of the most challenging issues against security clearance. A short sale on its own, however, should not affect most security clearances.

5. The deficiency judgment.

If a bank forecloses on a home, and is unable to pay off the mortgage balance after selling it, that lender may be able to pursue a deficiency judgment. This means the homeowner not only has a foreclosure on their record now, but would still owe the bank up to fifty thousand dollars or more. In a short sale, a homeowner can usually eliminate the deficiency completely, thereby avoiding judgments and future liability.

If you’re keeping score, a short sale is always the better choice for homeowners needing mortgage assistance. But it’s best not to try tackling a short sale on your own. Be sure you have experts with plenty of short sale experience on your side to ensure you have the greatest chance of success.