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