Do you remember this Tootsie Roll commercial from a few years ago? The boy in the commercial is curious as to how many licks it takes to get to the center of a Tootsie Roll lollipop? Check it out:
This blast from the past reminds me quite a little bit of a question that I get often about how a short sale impacts a seller’s credit. Short sale sellers frequently are curious about how their credit will be impacted by a short sale. In fact, recently one short sale seller asked me whether we might be able to pay the bank a little bit extra in exchange for a clear bill of health on the credit report.
It’s hard to know in advance what the impact will be on the seller’s credit of a short sale. Each situation is unique and each seller has a different set of circumstances. Some short sale sellers are still making payments on their mortgage because they can afford to do so. Others have lost their jobs and are having trouble making ends meet.
Just like the voiceover in the commercial that says “the world will never know”, it’s hard to know in advance what the result of the short sale negotiations will be. But what we can say is this: late payments have a significant impact on the credit score. A seller who is current on payments and participates in a short sale will not see the impact on credit in the same way as a seller who has missed eight mortgage payments on two different loans.
These three articles also contain helpful downloadable information about short sales and credit. So, if you want more concrete information about short sales and the future ability to borrow, check ‘em out:
Short Sales and Other Derogatory Credit Events
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