If I Short Sale what will Happen to My Credit
What is a short sale? It is essential that we understand what it is before we identify its effect on our credit scores, right? This type of sale is a way to avoid foreclosure. The property owner sells his estate for a value which is lower than the remaining balance owed to the lender. Since this is the case, the lender has to agree to the short sale before any homeowner can sell his house.
Many choose to short sale if they want to avoid foreclosure. This is a more viable option because they are able to have a small amount from the proceeds and they can still pay out the remaining balance of the property. Most lenders would agree to this because in several occasions, this will minimize the loss they will incur. It is better to get a discounted payment for the remaining amount owed by the homeowners than not getting anything.
Short sale is tiring. The seller has to make a deadline that is why he has to exert all efforts to sell the property. If he decides to have an open house, he has to make a lot of preparations, and yet, it will not guarantee him that the potential buyers will make good offers. If they choose to foreclose instead, they can stay longer in the house depending on when they will be asked to vacate the property.
How can this affect your credit? According to experts, the effect that a short sale creates to your credit is similar with what foreclosure can do. This is contrary to what most people believe. This is due to the fact that the credit bureaus look at foreclosure and short sale similarly, which is a serious default. Although the damage it creates is similar with the foreclosure, it is still preferable. This is because you will still be able to pay out the remaining balance of the loan at a discounted value. You can also use a portion of the proceeds to look for a home to rent.
If you do not have enough reason to do a short sale, better choose another option. This is because it is not easy to qualify for it. You have to convince the lender that you have no other choice. Remember that your lender will make his own investigation to check if your grounds are valid. If ever the lender agrees to it, you have to comply with the additional requirements and deadlines.
If a short sale is the most viable option for you, then get the approval of your lender right away. After you have been approved, do not waste time and act on it right away. Remember that you have deadlines to meet. And besides, this is still better than foreclosure because you can avail of a new house after two years. This is so much better than the five years you will wait if you foreclose.
The damage that the short sale will do to your score may not be less than the foreclosure. However, it has several advantages over the latter.
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