Original article source: Massachusetts Real Estate Blog
There are not many things that can negatively impact your credit
score more than a foreclosure or short sale. In fact one of the more
common untruths you will hear from many Realtors is that short sales
donâ€™t impact your credit scores like foreclosures do. This is absolutely
If you fail to pay your mortgage during a short sale the credit score
impact will be nearly identical to a foreclosure according to My FICO
the governing body for credit scoring.
Being a Realtor myself for the last twenty five years it does not
surprise me when I hear this misinformation being spewed in person or
around the internet.Â Some Real Estate agents will paint a short sale as
your ticket to the promised land and a foreclosure as a ticket to
financial misery for the rest of your life.
They do this of course because they want you to list the property
with them as a short sale. A true Real Estate professional should be
going over all possible financial options with you and not just looking
to put money in their wallet.
There are of course advantages to doing a short sale but a better
credit score is not one of them unless you are able to complete a short
sale without missing mortgage payments. The sad truth is that most but
not all of the time a lender is not going to grant short sale approval
unless you are behind in your mortgage payments. From a lenderâ€™s
perspective if you are able to continue paying your mortgage why should
they grant you a short sale?
The advantages of a short sale vs a foreclosure center around the
time you will be able to purchase a home again in the future. You will
be able to buy a home after completing a short sale much quicker than a
For a complete breakdown of how quickly you can get financing after
both of these events see getting
a mortgage after short sale or foreclosure. If you can show
extenuating circumstances of why you had to do a short sale or lost your
home to foreclosure you may be able to get a loan sooner. Some of the
acceptable hardships that could factor into a lenders decision are
divorce, loss of a job and unexpected medical expenses.
To continue reading see Fixing finances after short sale.