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Short Sale and Credit Score

If you are facing a foreclosure you may want to read this article on short sale. It will provide information on how short sale affects your credit and the difference between short sale vs. foreclosure. Keep reading to find out if choosing a short sale is right for you.

How a Short Sale Affects Your Credit

One of the ways that some people try to avoid foreclosure is by doing what is known as a short sale. This is an interesting arrangement in which the mortgage lender agrees to a home sale that amounts to less than what is owed on the mortgage. This is most likely to happen when a home has lost value or the equity has been tapped out. In such cases, there is often not enough equity in the home anyway to pay for the costs of discharging the mortgage as well as the costs of the sale.

Short sale v. foreclosure

In a short sale, your home is sold. If you make the proper arrangements, you can actually manage to avoid having the home show up as a foreclosure. With a short sale, though, you usually have to have tried to sell the home for 90 days at market value. If that doesn't work, your lender may agree to allow you to sell the home for less than what is owed on the mortgage. Mortgage lenders are also more likely to let you do a short sale if you are at risk of foreclosure, or have stopped making mortgage payments. The difference is written off by the lender, you may be required to pay taxes on the difference as income, since it counts as mortga

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