How Will My Credit Score Be Affected After Short Sale or Foreclosure of My WNY Home?

According to the credit agencies the impact a foreclosure, short sale or bankruptcy have on credit scores can vary depending on the credit profile of a particular person. The amount of the score’s drop is based on the person’s starting score. In general, a foreclosure will reduce a credit score by 140 points, he added; a short sale will drop the score by 130 points.
While both a foreclosure and a short sale will remain on a credit report for seven years, they are often reported differently. A foreclosure is reported as a foreclosure, but short sales can appear as “settled for less than balance owed,” or similar terminology.

NOTICE: Homeowners - There are distinct advantages for someone to choose a short sale over a foreclosure. Specifically, you will have the ability to become WNY homeowner’s again faster vs. had you experienced a foreclosure…here are the recently updated lending guidelines:

Conventional Conforming (FNMA/FHLMC)

1) Foreclosure is 7 years
2) Deed-in-Lieu is 4 years < 80% LTV and 5 years > 80% LTV for primary residences. 7 years for second homes and investment properties regardless of LTV.
3) Short Sales is 2 years < 80% LTV and 5 years > 80% LTV and 7 years > 90% LTV
4) Bankruptcy is 4 years
According to TransUnion foreclosure won’t in and of itself impact credit, particularly since it arrives on the heels of hard financial times.
“Foreclosure will be regarded as a derogatory action on a credit report and will have a more serious impact than a loan modification or a short sale, but only if it is publicly reported,” ……If a property is going into foreclosure, more than likely the damage has already been done to the person’s credit report with missed mortgage payments that resulted in the foreclosure.”

Note: it’s the MISSED payments that do the most credit damage vs. the actual short sale or foreclosure.
A bankruptcy causes a credit score to tumble a maximum of 365 points and appears on the credit report for seven to 10 years, depending on the type of bankruptcy. Again, if the starting score is already low, bankruptcy will drop that score significantly fewer points than if the starting score is high. So, if you have a B/K and your credit score is already low the actual credit point drop is LESS compared to someone with a higher score.

Please fill free to leave a comment at the bottom of this page and start a discussion and I will respond as soon as I can or you can always ask a question from the Q&A box at the top of the page.

Mark Key

RealtyUSA.com

3830 Union RD Cheektowaga NY,14225

716-603-8649 or e-mail mkey@realtyusa.com

How Will My Credit Score Be Affected After Short Sale or Foreclosure of My WNY Home?