Credit After A Short Sale



Are you wondering, “What happens to my credit after a Short-Sale?” Maybe you’re upside down 30% or 40% and you’re thinking of doing a short-sale. Maybe you’ve been working on a loan modification and it’s not working out; so you’re wondering what your options are.
Well here’s the thing; life after a short-sale is great! The main reason is because you wipe out tons of debt. That allows your credit score to go back up. A Short Sale is like a punch in the arm; it’s easy to get over. The big difference is what type of Short Sale terms you receive from your lender. Ask your agent or realtor to show you’re their success on past deals. They should be able to show you the terms they’ve negotiated for previous clients. You want someone with a good track record.
The best thing about a Short Sale is that banks don’t really go after you too hard on a Short Sale. The reason why is that they make 13% more on a Short Sale than they do on a foreclosure. So they want you to win. Remember, it’s all about the money in the end and if they can make more that’s what they want. Short Sales are easy if they’re started on them soon and with an expert helping you. The best part is that the bank pays for it all to happen so for you, it’s a pretty sweet deal. There is zero expense to you, the home owner, when you do a Short Sale.
So you want to know, “Is this going to show up on my credit report?” On a Short Sale it’s going to appear as a loan that you paid off less than you owed. It’s kind of like if you borrowed $100 from your friend and the next week you came to them and said, “Hey I only have $20 to pay you back. Can I pay you the $20 and we call it even?” Your friend says, “Well okay.” They’re not happy but it’s better than you paying nothing at all.
The legal terminology says that “the mortgage was paid off for less than was owed.” Most of the time you get it wiped out 100%. Sometimes they may also call it “Release of a lien for less than what was owed.” The bottom line is you get the most out of it with a “Get out of jail free” card so to speak; without any expenses. No again, the key is will your realtor or agent work hard for you to get the best terms. This is truly the biggest part of the puzzle because if you have someone who doesn’t work hard in order for you to get the best end of the deal, you could end up having problems.
You also have to realize that time is not on your side. You don’t want to wait until the last minute to act! If you wait to the last minute you make it so much harder for all of the parties involved. The more time you have to negotiate a better deal for you. So the only reason to wait is to give the bank the upper hand and help them out. You give the bank the opportunity to take you to the cleaners. You’re under no obligation either. You are not obligated at all until you sign the final papers and release that mortgage, so you are in control. Do not put it off.

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