Will a Short Sale Ruin My Credit?
Many home owners seem under the impression that doing a short sale instead of a full-blown foreclosure will somehow save their credit rating or make it easier on them when it comes time to buy a new home. I'm not certain who is perpetrating this myth. Perhaps it is inexperienced but well meaning real estate agents or maybe it's another entity that stands to profit from the situation facing many distressed home owners who are near or in default.
According to the financing professionals I have talked with, short sales are not the magical answer to financial woes. You may not be any better off working out a short sale with your lender than letting your home go into foreclosure. At least with a full-fledged foreclosure, you are in possession of the property to the bitter end, and you aren't making payments for that right . . . read more about whether a Short Sale Ruins Credit.
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Comments
It may not be a magical answer to avoiding foreclosure but it is in fact much better. Especially for the homeowner’s emotional state, a short sale is much less defeating.
Perhaps, if the short sale closes. If it doesn’t, the home owner has jumped through a bazillion hoops for nothing, put up with agents calling for home showings, strangers tromping through their home, keeping the home spic and span, broker opens, mls opens, Sunday open houses — not to mention baring their souls and bank accounts to the lenders, rushing off to all-night copy store to make duplicates of their tax returns and overnight to the lender, only to hear the lender has lost the paperwork. Foreclosures, on the other hand, are pretty straight and clean. The banks file a NOD (in CA) and about four months later, the owners move out.
Wow, I cannot believe what I read here…How about one thing they ask on the app for new Loan.. Have you had a Foreclosure? They do not ask if you had a short sale. So if you did a Short Sale Versus Foreclosure you don’t have to wait 2-3 years before you can buy a house (assuming you will get approved)
That’s right. They don’t ask about short sales on those apps, only foreclosures. That may change, though. If you let your home go into foreclosure, you must wait 5 years. But if you do a short sale, it’s 2, unless, of course, you are current on your payments. If you’re current, Fannie Mae guidelines say you may qualify to buy another home immediately.