Whether you sell your home in a short sale or the bank forecloses on it, your credit will take a considerable hit. Because both are categorized as not being paid as agreed, most lenders make no distinction, and you can expect your credit to be affected for seven years. When you take out a mortgage, you agree to pay back the loan in accordance with the stipulations included, and in response, the bank puts a lien on the home you purchase. If you are unable or unwilling to keep up with your end of the bargain by making regular mortgage payments, the bank reserves the legal right to sell the property and recover on its losses. With a short sale, the lender agrees to remove that lien and allow you to sell the home that you're no longer making mortgage payments on, and the primary advantage is getting out from the crushing debt and moving forward toward a brighter financial future.