Short Sale - How Does It Affect Credit?

The prospect of a short sale might sound very enticing to you if you get behind on your mortgage payments. Selling the property for less than is owed against it could be beneficial to you. However, the affect that it can have on your credit can be pretty painful. Here are a few things to consider before you go through with a short sale.

Foreclosure or Short Sale

Many people think that they would be better off as far as their credit is concerned by going with a short sale. However, in reality, this is not always the case. A foreclosure can affect your credit by as much as 300 points. When you go through with a short sale, it can affect your credit just as badly. A lot of it depends on how many missed payments you have before the sale goes through. 

Buying Another House

Another key consideration is how long it will take you to buy another house in the future. This is where a short sale has a clear cut advantage over a foreclosure. If you choose foreclosure, you will not be able to buy a house for at least another six or seven years. With a short sale, the number is as short as two years. 

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