What is a Short Sale?

Short Sale - Simply put, a short sale happens when a lender agrees to accept less than the outstanding balance of the loan on a property.

How will it effect my credit? The effect on your credit score will show up as a pre-foreclosure in redemption status, which will result in a loss of 200 to 300 points. If you had a previous FICO score of 700 you will see it fall to somewhere between 400 and 500. Generally, a waiting period of at least 24 months will be required before getting another loan.

Can the bank come after me for the difference in sales price and balance of the loan? Yes. The seller could be subject to a deficiency judgment for the difference between the loan amount and the amount paid to the bank from the sales proceeds.

If you are considering a Short Sale of your home, consult with a Real Estate Attorney before proceeding.