What is a Short Sale and how does it affect your Credit Score

Short sale is a process where the borrower sells the property in less than what he owes to the lender.  If the borrower is facing financial problems and cannot be able to make the mortgage payment for some time then he can think of Short sale so that he can make payments to the lender and to avoid foreclosure. When the borrower miss the monthly mortgage payments for some time then the lender will send the borrower letter for making the payment. The borrower should not over look these letters and should let the lender know the problem that he is facing for which he has missed the payments.
What is a Short Sale and how does it affect your Credit Score
Short sale is not a good thing but this is far better than foreclosure as foreclosure will have a huge negative effect on his credit report and will have a negative make on his credit report for almost 7 years. When the borrower short sells it shows that he is at least trying to make payments and it does not have a huge affect as foreclosure.
The lender will also need to accept the short sale. So if the lender sees that the borrowers financial problem is genuine and he cannot be able to pay then the lender may accept the short sale but it will totally depend on the lender whether he accepts it or not.
As told before the short sale have lesser negative effect on the borrower’s credit report and if he work on his credit report, then he can improve it in a year or two but definitely he will have to face huge financial problem in the initial stage after the short sale as getting a new mortgage or any other type of loans will be real tough in this period and even he get it, the interest rate will be much higher.