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Short Sale Vs' dead in lieu V's Foreclosure

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Short Sale Vs' dead in lieu V's Foreclosure

Can anyone tell me what whould impact my FICO the least? I have an investment property that I have the option of the 3 choices above. I have other properties being rented and of course our family home. All current, credit is A++.

Any help?

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Community Leader
Super Contributor

Re: Short Sale Vs' dead in lieu V's Foreclosure

If none of those options required you to incur late payments on the mortgage, then probably the short sale or deed in lieu.  Both will likely report as "settled for less than full amount" which isn't as bad as a "foreclosure" from what I know (I'm sure someone who knows more about the impact on credit scores will chime in).  It really will all depend on how the mortgage company decides to report to the credit bureaus, so perhaps you should get that in writing before agreeing to any of them.  However when it comes to getting mortgage financing in the future, a short sale is looked as the least severe of the three.

Helping people with mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
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Message 2 of 3
Senior Contributor

Re: Short Sale Vs' dead in lieu V's Foreclosure

I do believe that a short sale is the least damaging, but it depends on many things.  If there are and second loans, in some places they can come after you for that balance and a short sale doesn't solve that.  I am assuming that you have no way to keep the property in good standing, but are currently up to date on payments (or your credit would not be A++) 

 

Personally, my thoughts are that in any of these cases it will really hurt your credit and could cause a domino effect.  Your credit cards will see the short sale and either drop your credit lines, close them entirely, or rate jack them.  Also, you will be unable to purchase or refi for several years after this.  It will also affect any other financing (car loans, etc.).

 

If you can keep the one property up you should try to make it happen, the short term costs of trying to keep up will not equal the long term costs (particularly if you plan on remaining in the investment home owners category).

 

In the end, it is not the immediate FICO effect I would be concerned about.  I would be more worried about what additional costs I might incur due to the marks on the credit, as well as the inability to get credit lines, refi the properties, and any penalties that might be imposed on me by my current credit lines. 

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