Commercial Short Sale, Dade County: How It Affects Credit Score

If a person has to deal with a home that is "underwater" or whose worth is far below the mortgage amount, he can have a tough time financially. If he has to face foreclosure the condition is still worse, as it damages his credit rating and remains in the report for a period of 7 years. Under such circumstances, the only solution is going for a real estate commercial short sale.

In short sale, when a person enters into an agreement with the lender it implies that the lender has agreed to settle for an amount that is much less than what he should be actually getting back. There are many lenders that avoid short sale. This is because; foreclosure may be much more beneficial for them. It is also important to remember that a person cannot opt for a short sale just if he wishes. His property has to qualify for the same. Usually lenders shy away from such deals. But the US government is putting in all efforts to make it more agreeable for lenders.

Commercial short sale is definitely a good option to avoid foreclosure. Nevertheless, in Dade County a homeowner can enjoy more legal protection if he opts for foreclosure. Under such conditions, his credit rating is affected in the same manner irrespective of the option he chooses. If he is opting for short sale, it can affect his credit score in the same manner as it would have had he opted for foreclosure. Quoting Craig Watts who is associated with Fair Isaac, the company that is responsible for preparing FICO scores states "If someone is unable to repay their mortgage, regardless of how that turns out, that failure to repay the mortgage is highly predictive of future risk". Whether a person is opting for a deed-in-lieu, foreclosure or short sale, he has to walk away from his home once the property deed is transferred to the lender. This is because all the 3 cases are regarded as "serious delinquencies".

How the short sale procedure will affect a debtor's credit score depends to a large extent on what his score was prior to initiating the process. If his score was somewhere around 700, it could drop by 200 points. However, the impact is less severe on his credit score if he already has a ruined credit rating.

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