Loan Modification vs Short Sale

[The1]

I'm about to make my final decision today and need advice before calling Wells Fargo mortgage about my loan. I bought my home 41/2 years ago and have never been late. In fact, I'm current now but barely clinging to the 15 day grace period they provide. My dilemma is trying to figure out which direction to take, a loan modification or go the short sale route. I'm 47 years old and have always had good credit but I know both of these will hurt my credit score. I also don't want to be dealing with credit struggles in my 50's, if I can avoid it. Does anyone know which option would be the best to recover the quickest from? I understand that the mortgage co. will report that there's been a modification to the credit bureau's each month. QUESTION: if I sell my home while in modification, will my score improve after it's listed as paid in full? QUESTION 2: can you do a short sale even if your home still needs improvements? QUESTION 3: how long after a short sale will my credit improve and allow me to buy again? I'd really appreciate the information... Thanks!

[StartingOver10]

Are you upside down or has there been a change in your HH income? What is your home's current value and the mortgage balance? What is your payment and your gross HH income?

From a short sale perspective, your home can be sold even if it needs improvements. Depending upon the improvements it needs, it will impact the market value.

Your credit begins to recover immediately upon the sale of your home. Especially if you have managed to keep everything current. In order to purchase a new home with financing, you need to be three years from the date of transfer of your deed from you to the new buyer. There are exceptions to this if you remain current throughout the short sale period.

Sometimes the modification is the best solution to your problem. We don't know enough about your situation to give you any real input at this point.

[The1]

Hi, thanks for getting back to me. My home is now estimated to be between $168,000 to $175,000. I bought it for $210,000 and owe $199,000. I'm a single father of 2, and my income is 56,000 yearly. The major problem is that my income hasn't changed in 4 years. Since the economy tanked, a lot of coworkers were laid off but I was fortunately not one of them. However, I was told for the first 3 years that because of the economy they couldn't give me a raise. I was just told this year that I've reached my salary cap. I've had to dip into my savings the last two years just to make ends meet. Now I have exhausted my entire savings and need to do something fast. I know whichever I choose, I'm going to take a credit hit, I just didn't want it to affect me for so long that I'd be we'll into my 50's. I thought about letting them Forclose and getting an apartment but that'll destroy me for a longer period of time. Thanks so much for taking time out to give me advice. I really appreciate it!

[webhopper]

A short sale would probably be the right thing to do, unless you change jobs into something that pays more... I think you may have ended up with more house than you could comfortably afford at the time...

A lot of areas have shown a nice rebound in the local housing market...

Anyway to hang on just a bit longer to see if you can sell outright without having a short sale?

[StartingOver10]

^^^I agree with Webhopper. Did you get your estimate recently? What kind of estimate was it - using one of the automated valuation type algoriums (yuck ) or a true market analysis from an experienced agent or an appraisal?

I just had a seller's value increase from $215k to $235k in the past 6 months in our area. I know its worth the second value because we are closing shortly.  Depending upon which market you are in, you may find that you are not as upside down or maybe even in a breakeven position now.

Is it possible to rent it out for the next 12 months to make it through this time period?