Short Sale and Your Credit
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Az Short Sale Online Short Sale And Your Credit
When considering a short sale,you should be aware of how it affects your credit and your ability to acquire another mortgage in the future. If you intend to buy again, and right now you may not care, after the dust settles, you may want to own another piece of real estate. When you do, having done a short sale may mean that you have to wait a shorter time and get a better interest rate than if you had left your home or ignored the bank, and went through foreclosure. A short sale will have a negative affect on your credit , but the long-term effects are much better with a short sale, than having a credit report stamped with “Foreclosure”. Having that on your credit report is like telling everyone in the future, that no matter what you tell them now, later you won’t care if you pay them back or not.
Lenders just can’t help but notice a foreclosure, and what it tells them. A short sale at least shows that you cared enough to work out the best possible solution to the situation you were facing at the time. The way that FICO determines the effect of any change to your credit, positive or negative is based on a number of different things, and it is dependent on your history to pay. There’s your payment history, your debt load, the amount of time that you’ve had a credit history, any new credit you’ve obtained and the type of credit you use. Of course, your payment history reigns supreme here, followed closely by how much you owe. No single factor determines your credit score. If you short sell your home, your FICO score may take a dip, but comparable to foreclosure – possibly up to 300 points. Any “not paid as agreed” accounts are considered the same to FICO. This can stay on your record for 7- 10 years, impairing your ability to get considered for a decent loan. The main advantage of a short sale is the amount of time that it will take another lender to consider you for a loan. You will be able to buy another home for a workable interest rate a lot more quickly with a short sale than a foreclosure. The average is within 2 years as opposed to 3-5 years, or longer for a foreclosure, and that depends on what your credit was like before the foreclosure.
If you view this event as an opportunity to rebuild your credit in the interim between the short sale and purchasing another home, it’s possible to improve your credit in under 2 years. Over time, the negative impact on your score lessens. Keep on top of your debt and expenses and you may find that you are a homeowner again a lot quicker with a short sale. If you would like more information, or fell you might want to talk about the possibility of a short sale, contact us, for a FREE, no obligation evaluation of your situation, and let us help you determine if a Short Sale is right for you.
