"One of the most common short sale questions is whether or not it will affect one's credit. Simply put, the answer is yes—a short sale will appear on your credit report and most likely pull down your credit score. But borrowers still go for a short sale because the effects are a lot milder than in a foreclosure, and it's much easier to recover from. If you're worried about your post-short sale credit, read on for answers to commonly asked credit and short sale questions.

How Many Points Will I Lose After A Short Sale?

Credit scores are a vital part of one's public image, so it's no surprise that most short sale questions have to do with them. There's no system for point deductions in a short sale, as each lender evaluates its borrowers differently. Generally, one's credit score will drop 80 to 200 points following a short sale. It depends on various factors such as your mortgage default, how much debt was written off, and the terms set by your lender.

What Will Appear On My Credit Report?

Again, there's no standard way of reporting a short sale to the bureaus. Most borrowers asking short sale questions want to know if it's as bad as a foreclosure. If the lender reports it as a “pre-foreclosure in redemption,” it tells the bureaus that you were already seriously delinquent at the time of the sale, so the effect is close but not as drastic. A more favorable mark is “paid as agreed,” which means the lender simply wrote off the difference and considered the loan paid.

How Long Does A Short Sale Record Last?

Many short sale questions also deal with recovering from the credit damage. The good news is that short sales do not last as long as foreclosures on your credit report—the duration is generally from five to seven years, compared to ten on a foreclosure. The lender can decide to remove the record earlier, although these cases are fairly rare.

Can I Buy A Home Again After A Short Sale?

A recent study showed that former homeowners often ask short sale questions regarding future mortgages. Depending on who owns or services your loan, you may have to wait up to two years before you can apply for a new mortgage. In some cases, you can even buy a home immediately after closing. However, the longer you wait and let your credit score climb back up, the better the terms you can get."

Tags: Short Sale Short Sale And Credit