FICO Facts you may not know – Short Sale Impact
There has been so much misinformation that gives the wrong information to sellers who are struggling with their mortgage and need to do a
short sale. Should they let their home go into foreclosure? I say NO that is the worst thing you can do. Find a short sale agent in your area who can discuss your home options now, please do not wait.
Everyone worries about the impact on their FICO score (Fair Isaac credit company) when you become delinquent in your mortgage payments, do a short sale or ultimately have your home end up in foreclosure.
Your FICO score is what determines what rate you get on a future mortgage, any loan or credit card, insurance cost or even whether you will be hired for a particular job. It is something to be treasured if it is a high score and taken very good care of. FICO scores range from 200 to 900 (900 being the best credit score).
The FICO Banking Analytics Blog has put the disinformation of the after effects of a short sale and foreclosure FICO score of a consumer to rest with their upfront analysis of studying a pool of credit defaulters. It is amazing to note that if your FICO score starts off high (say 720 or above) when you start a short sale you will be hurt significantly more on your ending credit score after the short sale than if you had a lower credit score (say 680). Now that is not news to me but may be for you. I am a North Kingstown short sale agent that helps sellers struggling with hardships throughout RI and this is important information for my clients to know.
A short sale with a higher credit score ( say 720+) at the beginning of this process will be hurt more than a lower credit score (say 680) with no deficiency balance. However, a short sale with a deficiency balance (home sold for less than the monies owed the lender) will impact your credit more than one with no deficiency balance no matter what your credit score was at the start of this process. This does make sense because the bank is forgiving (only if it is stated as such in the short sale approval letter) monies owed on the mortgage balance.
Foreclosures will have the SAME credit score impact as a short sale...it will not be a lower credit score with a foreclosure. Big surprise to many people. This fact is not communicated properly or is misunderstood by many in the real estate industry. By no means does it mean that a homeowner should let their home go into foreclosure! The long term effects of a foreclosure on your credit score and recovery time to improve your credit score are much more significant as I will discuss in another post.
Is your head rolling yet …this is information you need to know. FICO Facts You May Not Know – Short Sale Impact.
Ginny Lacey Gorman is your go to North Kingstown Real Estate agent for homes in North Kingstown RI and beyond…knowing the geographic area, schools, happenings,important tidbits of information and businesses well.
As North Kingstown short sale agents, if you are having trouble paying your mortgage contact Ginny to help you through the short sale process successfully.
Waterfront, oceanfront, luxury and coastal RI real estate are her specialty but all of RI is her backyard. When you are in need of a good professional for your buying and selling needs and an internet savvy marketer who sells RI houses in this real estate market – call Ginny at 401.529.7849.