Mortgage Short Sale? Effect on Scores?

07sky04 · ‎07-24-2007

We're currently selling our home. The listing price is already below what we owe (by about $1000) due to the crappy housing market here in Michigan.

What effect does a "short sale" have on our credit scores? We'd like to get out of the house ASAP, move in with my parents so we can save a TON of our money and payoff most of our bills and in like 3 to 6 months get a new house (newer construction).

Our scores are low 600's with a couple of 30 day lates dating back to 2003 and 2 collections being removed within 30 days due to a PFD.

Any thoughts?

Anonymous · ‎07-24-2007

You will first have to negotiate the short sale with your mortgage company. They will have to approve it before the transaction can take place. You are still responsible for the difference in the payoff. If it is only a 1K I would suggest the two real estate agents splitting the difference out of their commission to make the deal work. Be creative!

Jacque383 · ‎07-24-2007

Hi,

Are you saying that you're only asking $1K less than what you owe? If so, why do that...Offer to carry it back or something...

And when negotiating the short sale, most short sales are negotiated with the bank agreeing to take less than what's owed and then forgiving the rest.

Best of luck to you.

Anonymous · ‎07-25-2007

Typically people do a short sale if they are getting behind on their mortgage. Is this your case? If there is only a difference of 1k I don't see how that would make your house sell any faster. If someone likes the house enough to buy and write and offer chances are you won't lose it over $1000. Yes, with a short sale you are responsible for the difference. Have you already discussed this with your mortgage company? The short sale must be approved prior to you accepting the offer...really it doesn't matter if you accept it the mortgage company holding the lien is what has to accept this short sale. If you are just selling your home for less than what you owe and has nothing to do with you being behind on the mortgage you will need to bring the difference to closing and pay at that time. Also if this is the case then your realtors should lower their commission so that you don't have to bring in 1k. If not I would never use that realtor again or send any business to them. Hope that helps

Anonymous · ‎06-11-2008

Late payments are the biggest issue when it comes to your FICO score so, my suggestion is that you be extremely dilligent by making timely payments as well as removing your debt entirely.....a FICO score is based on debt to ratio and there are any factors to that one being income (reported income) the other being the amount of credit cards, and other outstanding loans or open available credit even if not used............and when you do use a credit card and use more than 20% of the total available amount you are exceeding limits of how your score is calculated..but, again much of this is based on total income and your ability to pay off debt ...........by making only minimum payments shows that it is difficult to pay back the loan..............it isn't easy but, you can raise your score by at least 100 points in probably a year................good luck!!!!!

Junejer · ‎06-11-2008

@Anonymous wrote:

Late payments are the biggest issue when it comes to your FICO score so, my suggestion is that you be extremely dilligent by making timely payments as well as removing your debt entirely.....a FICO score is based on debt to ratio and there are any factors to that one being income (reported income) the other being the amount of credit cards, and other outstanding loans or open available credit even if not used............and when you do use a credit card and use more than 20% of the total available amount you are exceeding limits of how your score is calculated..but, again much of this is based on total income and your ability to pay off debt ...........by making only minimum payments shows that it is difficult to pay back the loan..............it isn't easy but, you can raise your score by at least 100 points in probably a year................good luck!!!!!

Income is not factored into FICO scoring whatsoever.