Short Sale Information
A Short Sale is an alternative to going through the pain of a foreclosure. The term Short Sale simply means that the home owner has to sell his/her house for less than what is owed to the bank. The bank must agree ahead of time to selling the house as a Short Sale, and must also agree to the selling price and approve the buyer.
Both a Short Sale and a foreclosure stem from difficult financial situations related to a homeowner losing their home, there are many relative benefits to the Short Sale:
A Short Sale itself will minimally affect your credit score, usually around 50 points. Late payments usually have the largest negative impact on your credit score from a Short Sale and can average 30 points or more each. A foreclosure could lower your score 300+ points and will stay on your record for 10 years.
There is not a credit reporting item for a Short Sale. Upon sale, your mortgage company will typically report the short sale as ‘Paid’, ‘Settled in full’, or ‘Paid as Negotiated’ on your report, whereas a foreclosure is recorded as such and is permanent in the public records of your county.
A Short Sale will typically not affect your current or future employment or ability to get other mortgage financing.
You may be eligible for favorable financing like Fannie Mae-backed mortgages after only 2 years, as opposed to 5 to 7 years after a foreclosure.