Will A Short Sale Hurt My Credit ?
Many homeowners who are unable to meet their financial obligations towards paying the mortgage end up wondering what options are available to them. |
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While foreclosure is one option, it has the ability to spoil the owner's credit scores and rating. And, when it comes to a short sale, homeowners have the same fear. They wonder whether a short sale will hurt their credit.
Usually when a homeowner opts for a short sale, the property is listed for sale through the Multiple Listing Service, or MLS. Therefore, a licensed real estate agent has to be involved in this process. On seeing the listing, other real estate agents will bring potential buyers to see the property.
If the buyer likes the property, he will make an offer. Usually the amount offered is always less than the amount that is due on the mortgage. That is why the seller has to get approval for the sale from the lender. A short sale is usually approved by a lender if the homeowner is behind on his mortgage payments.
While a foreclosure can affect your affect your credit scores dramatically, a short sale will not have a huge impact. Yes, your credit scores will fall after a short sale, but this will be primarily because you are behind on your mortgage payments. However, there are some real estate agents and mortgage lenders who claim that due to a short sale, a homeowner's credit score can be affected by 200 to 300 points. But not all agree on this. There have been instances where the credit score has dropped only by 100 points. Therefore, it cannot be said by how many points your credit score will come down. One thing is for sure that a short sale will hurt your credit, but it will not ruin it.
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