While
in both cases, short sale and foreclosure, the delinquent mortgage
will negatively affect their credit rating, at least short sellers
avoid having a
"debt discharged due to foreclosure" on their credit
reports. Mortgage and credit experts say that, after bankruptcy,
having a foreclosure on your credit report is the worst result
and will reduce your credit score by over 250 points. You could
also have to wait up to several years to qualify for a mortgage
at a reasonable rate.
Short
sales show up on a credit report as a "pre-foreclosure in
redemption" status and can result in a credit score reduction
of 100 points or less. After the sale, the mortgage may show up
as "discharged." People who successfully complete a
short sale may also qualify for a mortgage at a reasonable interest
rate in as little as 18 months. So, if buying a home is a future
goal, then a short sale is the better option for many families.
