Depending upon the seller situation, the type of sale they choose to pursue my have a greater affect on their credit score.
Foreclosure is a legal name given to describe a process of the lien holder taking control of the property. Depending on the area you live, the timelines could take from 30 days up to months.
Short sales are properties being sold were the seller attempts to dispose of the property with the third party lien holder having to agree to the terms of the contract prior to sale. The bank my may or may not choose to agree to a lesser amount recovery and let the seller off the hook.
I will talk of the ways the lien holder may resolve the mortgage in a future post.
What is the possible affect in a foreclosure and short sale when pertaining to your credit?
a) Being foreclosed could cause up to a 200 point drop in your credit score and it may be difficult to purchase property or anything on credit in the future.
b) Short sale may cause as little drop as 50 points in your credit score and could keep the door open for buying in the future.
There are many reasons for homeowners distress in the current times, life changes, job changes and health problems may lead to these situations. Not all can be helped. My advice would be for the owner to seek the advice of your attorney and accountant if your situation is dire. Consult a realtor to assist and give guidance through short sale questions.
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