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Short Sell Mortgage and Effect on Credit Score

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Anonymous
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Short Sell Mortgage and Effect on Credit Score

I currently have an excellent credit score.  However, I am also in the process of short selling my home (approx $25000 will be unpaid).  What overall effect will this have on my credit in terms of overall credit score?  I have been told that a short sell is not near as bad as a foreclosure, but no one is able to tell me how many points my credit score will actually decrease.
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Anonymous
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Re: Short Sell Mortgage and Effect on Credit Score


@Anonymous wrote:
I currently have an excellent credit score.  However, I am also in the process of short selling my home (approx $25000 will be unpaid).  What overall effect will this have on my credit in terms of overall credit score?  I have been told that a short sell is not near as bad as a foreclosure, but no one is able to tell me how many points my credit score will actually decrease.


From what I've read here (and elsewhere) a short sale is seen as a pre-foreclosure/foreclosure in the eyes of lenders. Meaning, you will more than likely have to wait 2-3 years before buying again.

The effect it will have on your scores will depend on several variables.
1, HOW the lender chooses to report this on your CRs.
2, HOW much is owed? Does the PMI/MIP cover that amount? Meaning, how much of a DP did you put down (percentage-wise)? If you put down 5% and the $25K can be construed as the rest of the down payment (which is where PMI/MIP comes in -- it defrays the "missing" down payment -- so if you put down 5%, it insures the other 15% to make a 20% DP).
3, If left owing a substantial balance (meaning, over and above the "missing" down payment amount), does it go to collections?
4, And good, otherwise, is your credit?

Those variables can't be predicted without knowing more. Smiley Sad
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