Short Sale Credit Score Effects
There are few things as damaging to your credit as a foreclosure or bankruptcy filing. For many borrowers, this is reason enough to seek alternatives to foreclosure when they can’t keep up with mortgage dues. These days, one of the most popular and efficient ways to avoid foreclosure and protect your credit is by doing a short sale. This article discusses some of the benefits of a short sale for struggling homeowners.
First, you may be wondering, what is short sale and how can it help my case? In a short sale, you sell your home for less than your outstanding balance and forward the money to your bank as payment for your loan. If your bank agrees, you can free yourself of the heavy mortgage and start rebuilding your finances, all without the trouble of foreclosure.
Many people also choose short sales because it gives them more control over the sale. In a foreclosure, your bank simply takes over your home and auctions it off, and you can’t do much about it. A short sale leaves matters in your own hands, so you at least have the dignity of choosing who gets to buy your home.
One thing many homeowners ask is what is short sale going to do to their credit. Of course, if you know what is short sale, you’ll know that it will still reflect badly on your record—but compared to a foreclosure, the marks aren’t as negative. On average, a short sale takes about 150 points from your credit score, while a foreclosure can slash it by as much as 400. Foreclosures also stay on your credit report much longer, often up to ten years, while a short sale can be cleared up in five years or less.
To get the most out of a short sale, consider working with a short sale attorney or firm. Even if you already know what is short sale, a professional in the field can help you get things done faster and negotiate more efficiently. They may cost more at first, sure, but considering the convenience and security they provide, it’s well worth the cost.