How Does A Short Sale or Foreclosure Affect Your Credit?
Sergio Rebollo Jr. Real Estate Agent Miami, FL (305) 582-4062 Contact Profile
Homeowners facing foreclosure have a number of options, one of which is doing a short sale. Some people, depending on their situation, may allow a property to go into foreclosure instead of attempting a short sale. One reason is they don't have any expectations of saving the property so walking away is an easy solution. By accepting a short sale, the lender can avoid a lengthy and costly foreclosure, and the owner is able to pay off the loan for less than what he owes. The primary consideration above all is the affect both can have on your credit score.
The Basics Of A Short Sale
The concept of a short sale is fairly simple. A short sale occurs when the sale proceeds of a property fall short of what the owner still owes on the mortgage. Many lenders will agree to accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the
mortgage payments. A few words of warning are in order. Not every lender will negotiate a short sale. If for example your payments are current, yet you foresee imminent cash flow problems arising that will affect your ability to make your monthly mortgage payment. Lenders have no interest in negotiation unless your payments are several months late. Another consideration is you may be held liable for taxes on the difference between the sale amount and the original loan amount. Short sales require nerves of steel.
I am considering selling our investment property. We owe more than it is worth, but we are concerned about how a short sale will effect our credit. Also, my husband filed bankruptcy over 10 years ago.
1) Could we sale the property for less that what we owe and pay the difference without the bank knowing?
3) What does a short sale do to our credit? We plan to purchase a vehicle within the next year and fear that this won't be possible having a short sale on our credit.Source: activerain.trulia.com