Short Sale or foreclosure? 1 hurts your credit more than the other

Since a lot of the homes in the Valley are worth less than what's owed on them, walking away from the mortgage has become an option for some.

That means your house goes into foreclosure.

The mortgage holder or bank takes it over and sells it for what they can.

A short sale is similar but you have to reach an agreement with the bank to accept less than what is owed.

So which one affects your credit most?

Both will hit your for about 7 years.

But Scott Drucker, a real estate attorney with the Phoenix firm Mack, Drucker and Watson said one will cause less damage to your credit.

Drucker said a short sale is usually not as harmful to your credit report.

He said it will also leave you in a better position to be eligible for conventional financing sooner than with a foreclosure.

Drucker said a foreclosure is recorded as such with the credit reporting agencies.

But a short sale is reported as something that was settled or negotiated with the bank.