The #1 question I get is this:
I want out of my house (or my rental properties.) But I am worried a short sale will hurt my credit score.
I am still current on payments. What should I do?
A short sale does not hurt your credit score too bad. Maybe 10 - 50 points on your FICO score, if that. I
would say 20 points off is more like it.
What hurts a credit score is being in foreclosure,
or being late on payments, or both.
Foreclosure is very bad on a credit report. So is
bankruptcy.
But a short sale does not have to show up this way. It can show up as "paid - settled for less than
the amount owed." And if you are not late at all and you do a short sale, then this is not much of
a ding.
If you have to be late because you can't pay, then be late. Lates are important to your credit
score only to the extent they are recent. After a year the lates are much less important.
Your credit score will bounce back after a few lates.
But, if you can, do a short sale WITHOUT ever
being late.
Will the lenders agree to a short sale if you are not late?
In my experience, YES! You can do short sales
without being late.
Simply list the home (with me!), get a contract, we put your short sale package together,and then submit it to the lender. And follow up like crazy!!
Keep making your payments.
Then you can get out from under, have decent credit and buy something else, taking advantage of today's extraordinary market!
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