OfflineWe do understand that foreclosures affect ones credit/Fico score. Since Short Sale is an negotiating factor between the owner of a property and the lender, where maybe in some cases, the property is sold for less less than is owed, how does this transaction affect the owner's credit/Fico score. Research shows that the bank/lender prefers a short sale to a foreclosure, to avoid large house inventory, in this case is short sale more of an advantage to a disadvantage.
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The simple answer to this question is it all depends. Some banks report it differently to the credit bureaus. I called countrywide once and talked to the loss mitigation department and asked someone there and she said a persons credit score will only drop 5-10 points, but other banks I talked to said it would drop between 100-150 points.
One important thing to remember is why a short sale is happening. 99% of the time it is because someone has missed a couple of mortgage payments. That fact alone will drop ones credit score bigtime. Also, if someone has two late payments (of any type i.e. mortgage, credit card, etc.) on their record within the last 12 months then they will not qualify for a mortgage for at least 12 more months. Make sure your monthly payments are made on time! If you do have bad credit it isn't the end of the world. Credit can be built back up.
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it depends on the bank and how they do things. But atleast a short sale credit ding is waaay better than a foreclosure ding...
The bank will/should opt for a short sale because it will save them, on average, about 30k to go through the forclosure process. Then afterwards they have a liability sitting on their books until they sell it, each day loosing them $$.
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