Bad credit score is evidence of hardship, but by itself, not proof.
Short sale process is a big hassle for seller and buyer. Agents have tough skins, so they take the hassle in stride, like a cabbie with a drunk passenger.
If you already settled with Visa and Amex, or will settle soon, or will Visa and Amex remain on cbr as outstanding bad debts for seven years? Get head to head with an unbiased expert for some one on one advise. Internet snippets from Trulia Posting Pros is entertainment. Don't rely on us online for this important decision.
In the case where you are deciding to sell your home at this time, and there is a deficiency in the amount you recover to pay off your mortgage, you are obligated to pay the difference. A short sale, whereby you are asking the lender to accept less than what is owed, is only approved by the lender under 3 conditions: you have a hardship, you do not have assets that could pay the difference, and last, that you have a monthly shortfall in your income to cover your monthly expenses.
It is incorrect to assume that you have the choice to do a short sale just because you don't want to pay the difference. It is also improper to assume that realtors ought to surrender their commission to cover the difference. If they've done the service to sell the property, then they should get paid as agreed in their contract as well. (however if they choose to work for free that's all your own business).
In the case where you could qualify for a short sale by meeting those three criteria, then a short sale would have some negative affects on your credit but is recoverable after a short amount of time. If you pay the difference in the sale, you are free to buy immediately.
Last, we are still in a bit of an upward market. $5,000 is not a large differential. Maybe with proper marketing and a little time, you may get a price to help you break even with another buyer.
Sheryl Arndt, Real Estate Broker - Sr. Loan Officer CA only
REO & Short Sale Specialist
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Although a short sale is better than foreclosure, if you can afford to pay the difference out of pocket, you will fare better. There are some small ramifications that make paying out of pocket better than a full fledged short sale.
The time it takes and the unpredictability of many factors that would need to be discussed before hand with a short sale specialist to determine which ones may affect your sale, are both good reasons to go traditional.
If you do decide to short sale, based on the question you are asking about your credit and how it is affected, ss it pertains to your credit, only late payments on mortgage will show, and after sale, mortgage is normally reported as â€˜paid as agreedâ€™, â€˜paid as negotiatedâ€™, or â€˜settledâ€™. This can lower the score as little as 50 points if all other payments are being made. A short saleâ€™s effect can be as brief as 12 to 18 months.
If you are not behind on your payments, and attempted to purchase a new property after completing a short sale, according to C.A.R.:
"The loan will be eligible for delivery to Fannie Mae provided that the borrower's previous mortgage history complies with Fannie Mae's excessive prior mortgage delinquency policy--that is the borrower does not have one or more 60-, 90-, 120-, or 150-day delinquencies reported within the 12 months prior to the credit report date--and the borrower has not entered into any agreement with the short sale lender to repay any amounts associated with the short sale, including a deficiency judgment. (Source: FNMA Announcement 08-16 Q&A, 8-13-08 ; FNMA Selling Guide, Part X, Chapter 3, Section 302.09. .)
Hope that helps.
Keisha Mathews, REALTORÂ®
CDPEÂ®, HRCÂ®, HAFAÂ® Certified
SAR Masters Club Member 2012
SAR Masters Club Steering Committee
Mathews & Co. Realty Group
@ Century 21 Landmark Network
(916) 370-1803 cell
The direct answer to your question is that it is unknown how much the short sale will affect your credit. Do you have other late payments on your mortgage? Any other liens? All of these things vary the degree by which a short sale affects your credit. Generally the hit is between 100 and 300 points.
Here are some other things to think about:
1. A short sale is on your record for several years and can make it difficult to purchase another home for 2+ years. How soon do you want to purchase again?
2. The home buyer who you currently have an offer from may not want to go through a short sale. Are you willing to start over with the home selling process?
3. Have you spoke with your agent about splitting up the cost of the $5,000 between buyer, seller, and agents? Maybe there is a compromise so no one has to go through a short sale, and no one has to lose too much money.
Best of luck - I hope this helps.