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New Visitor
SAllen
Posts: 3
Registered: ‎07-23-2009

Short Sale effect on credit?

Hello, I'm currently going through the process of a short sale on my mortgage and I'm wondering what it will do to my credit. Right now my credit score is 744 with a great payment history on several trade lines. I plan to keep up with all the mortgage payments during the process. Does anyone have some insight on what I can expect for my credit score after the short sale is complete?
Frequent Contributor
illtakecreditforthat
Posts: 320
Registered: ‎05-03-2009

Re: Short Sale effect on credit?


SAllen wrote:
Hello, I'm currently going through the process of a short sale on my mortgage and I'm wondering what it will do to my credit. Right now my credit score is 744 with a great payment history on several trade lines. I plan to keep up with all the mortgage payments during the process. Does anyone have some insight on what I can expect for my credit score after the short sale is complete?

Check out the following link:

 

http://homebuying.about.com/od/4closureshortsales/qt/060907SScredit.htm

I want PATIENCE...and I want it NOW
New Visitor
SAllen
Posts: 3
Registered: ‎07-23-2009

Re: Short Sale effect on credit?

Thanks for the link. The only problem is that it doesnt cover the scenario of staying current with the payments during the process.

Frequent Contributor
illtakecreditforthat
Posts: 320
Registered: ‎05-03-2009

Re: Short Sale effect on credit?


SAllen wrote:

Thanks for the link. The only problem is that it doesnt cover the scenario of staying current with the payments during the process.


Technically, you're negotiating with your lender to take an amount less than what is contractually owed.  If you're not late, you wouldn't be dinged for late payments.  However, I doubt that the lender will report your loan as "paid satisfactorily." I'd call your lender and ask how they would report the loan to the CRA?

I want PATIENCE...and I want it NOW
Super Contributor
Lel
Posts: 5,268
Registered: ‎03-18-2008

Re: Short Sale effect on credit?

Short sales, regardless of whether you are current with your payments at the time of the sale, will have a significant negative effect on your credit score.  This is assuming that your lender adds a comment on to your account that reads "Account settled for less than the full balance" or something similar.  I've heard anecdotal stories from people who say that this notation didn't appear on the credit report after a short sale - lucky them.

 

The major benefit for you, completing a short sale without being delinquent, is that you don't have to wait two years before obtaining a new mortgage.  However, it may be difficult to do so because your scores may drop too far to qualify. 


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