One of the most frequent questions we’re asked is if a short sale has the same effect on a consumer’s future credit as a foreclosure. The answer is…ABSOLUTELY NOT!
When it comes to credit reporting, a short sale will most likely have a much less catastrophic effect than a foreclosure. As of right now, short sales are not listed as “short sale” on your credit report, but as paid as agreed, paid as negotiated, or paid for less than the original amount.
Also, If you are considered current with a short sale, you still have the ability to apply for an FHA loan, while having a foreclosure on your credit report stays there for a mandated 7 years. Not to mention, with a foreclosure, you must go through months of delinquency notices and in many cases a court appearance, which is also reported on your credit report.
If you’d like to learn more about the misconceptions of short sales, send me a request at firstname.lastname@example.org for our FREE report, The Seven Most Dangerous Short Sale Myths.
As a Certified Distressed Property Expert (CDPE) I receive a lot of updates and content. Some of the information in this article came from the CDPE Blog.