What does a short sale do to my credit?

Doing a short sale may be more credit-friendly than a foreclosure, but that doesn’t mean you’re safe from the damage. Short sale credit effects cannot be avoided—but luckily, they can be controlled much more easily than a foreclosure. What a short sale does to your credit depends on several factors, such as the amount you owe and how far behind you were when the short sale closed. Here’s a quick look at how short sale credit effects happen and what you can expect after closing day. 

Effects of Delinquency:Most borrowers have missed at least two months’ worth of mortgage payments before initiating the short sale. In fact, this is a requirement for most banks, as well as the HAFA short sale program. This accounts for a significant part of the short sale credit impact. By the time a short sale application is submitted, there may already have been some short sale credit damage. One thing you can do is try to negotiate a short sale while you’re still current—with sufficient proof of hardship, your bank may approve your request anyway.

 

Deficiency Amount

The difference between your home’s selling price and your mortgage balance, known as the deficiency, is probably the biggest factor in short sale credit effects. Lenders will try to earn as much as possible from the sale to make up for their losses or at least minimize it.  Your Realtors goal is to try to sell it for as much as possible.  The less the lender has to forgive from your balance, the lower the short sale credit impact will be.

Reporting Differences

There aren’t many rules on how a short sale should be reported, so lenders tend to word them differently from each other. What appears on your credit report.  Your credit report can either be a “pre-foreclosure in redemption”, “paid as agreed”, or even a straight forward closure.  This depends both on your mortgage situation and your lender’s policies.  It is always recommended to engage an attorney, and if you have a capable agent, he/she may be able to make recommendations on how to engage an attorney to discuss this matter more in-depth with your Lender and have it worded so that the short sale credit damage won’t be as high.

Fixing the Damage

Once the short sale has closed, you can start working on getting your credit score back up. Start by saving up as much as you can, so you’ll have liquid funds for emergencies instead of taking out more credit. Limit your credit cards to just one, and use it only when you need to. If you’ll be renting a home afterwards, be sure your rent is paid on schedule so that your landlord will report positive reports to the credit bureaus and so you can build a good rental history and improve your credit score faster.

I would be happy to meet or speak with you to discuss your options.  As a Certified Negotiation Expert and a Short Sale & Foreclosure Resource, my qualifications permit me to provide you with superior service based on experience and knowledge.

Joyce Corsi Hazen, REALTOR®, CNE, SFR
Long Realty Arizona Properties
Member of the Peoria Chamber of Commerce
Cell:  602-284-9822
Office:  623-209-2400
Fax:  623-505-4346
Toll Free: 877-477-2578 (U.S only)
Website:  www.JoyceHazen.com

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About Joyce Hazen, REALTOR, CIPS, CNE, SFR

An Arizona and Greater Metropolitan Phoenix Realtor, I am a full service professional with an International Designation, CIPS, who works with Buyers, Sellers & Investors all around the world. I have experience in both the residential and commercial communities. In addition, as a Certified Negotiation Expert I work my hardest to utilize my negotiation skills to benefit all clients. I also speak French, English and Italian. Originally from Canada, having moved to the Valley in 2000, I pay special attention to your personal individual needs and desires, to find you the home, land, or building that you’ve been dreaming of. Real Estate has given me the privilege of working with so many wonderful people and with my knowledge, tools and skill set I have been fortunate to realize that individual needs change from person to person, business to business, culture to culture, and that every request is important to you. For that very reason, when I embark on a journey, I work closely with you, whether you are buying or selling a home or commercial space, whether it is a tradition sale, short sale or foreclosure. I will help you as I am highly motivated, results driven and have taken time to research the marketplace, trends and opportunities to know how to best serve you. With my experience, culture and languages, you can rest assured that your best interests are my priority. I will help you find the home or property of your choice and professionally negotiate on your behalf. It is for these reasons that so many of my clients refer me to their friends and families. The Valley of the Sun has been one of the fastest growing U.S. metropolitan communities, Phoenix has grown tremendously over the past couple decades. Financial Institutions are working with Americans, offering terrific mortgage deals, as well as with foreign investors who are interested in purchasing second homes… the opportunities are endless. My mission and goal is to provide you with superior service. Welcoming new residents to Arizona including Americans and International clients who want to relocate permanently, a home away from home or to escape cold winters, is a pleasure! I enjoy meeting new people and always set my goals high and strive to achieve them. If you’re ready to search for the perfect property, I am here to show you the very best homes that meet your criteria.
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