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While short sales generally do less damage to homeowners’ credit scores than foreclosures, these transactions are a matter of public record and have some impact on a homeowners’ credit history. How much short selling damages a homeowners’ credit score depends on a number of factors. One of the most important of these factors is who handles the transaction. Knowledgeable real estate agencies and foreclosure companies with experience negotiating short sales are often able to minimize the damage to their clients’ credit scores. Inexperienced individual landlords and real estate agents tend to do worse in foreclosure transactions.
mortgage payment default period
Each missed mortgage payment adds a black mark to the homeowner’s credit history, and the longer the sale transaction takes, the more missed mortgage payments will count toward the homeowner’s credit. Sales that close faster cause less damage to homeowner credit. This is even more reason to find a professional foreclosure agent who can speed up the sale.
forgiveness of deficiency
Whether or not the mortgage lender chooses to forgive the homeowner the “reduction,” or the balance on the original loan, greatly affects the effect the sale will have on homeowner credit. Lending companies may choose to accept a short sale but sometimes hold the homeowner accountable for the shortfall in order to sue the owner. This can do a lot of damage to landlord credit.
Foreclosure transactions that are expertly conducted, however, will take precautions against the lender pursuing the homeowner for the remaining balance. Knowledgeable real estate companies and agents typically include protection from “deficiency judgment” lawsuits within short sale negotiations.
How does short selling affect my credit history?
Short sales, like foreclosures, remain on the homeowner’s credit history for seven years. Its effect on credit score, however, can vary greatly depending on the factors mentioned above. Sales that are conducted swiftly and without a deficiency judgment can result in reinstatement of good credit within 2-5 years. In less fortunate cases, it can take up to seven years to restore good credit.
Finding a Short Sale Specialist
Having your Michigan home short sale handled by an experienced foreclosure company or agent greatly affects the effect this transaction will have on your credit score. When looking for a foreclosure company, be sure to research the company’s track record and references. Home foreclosure agencies such as Sun Law Group have a proven track record of completing foreclosure sales quickly and efficiently, providing homeowners with the best possible results.
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