Posted on: 29th Dec, 2005 11:49am
A Short sale is where the lender agrees to accept an offer for a house that is less than the amount owed on the mortgage. Short sales happen when the owner is behind or about to become behind on their mortgage and want to avoid foreclosure. Moreover, if the home is located in an area where home prices are on a decline, then it may be sold off for less at a price that isn't enough to cover the loan balance.
A short sale is less damaging to your credit score than a foreclosure. Your FICO score will drop by 75-100 points if you do a short sale, compared to 250 if you get a deed-in-lieu.
By attempting a short sale, the borrower can avoid foreclosure and a decrease on their credit score. Moreover, a short sale may be faster and less expensive compared to foreclosure.
A short sale is less damaging to your credit score than a foreclosure. Your FICO score will drop by 75-100 points if you do a short sale, compared to 250 if you get a deed-in-lieu.
By attempting a short sale, the borrower can avoid foreclosure and a decrease on their credit score. Moreover, a short sale may be faster and less expensive compared to foreclosure.
How to negotiate for short sale..
In most cases, borrowers are approved for the sale only after they have been in default and the lender has served them with a Notice of Default. At times, the borrower has the option to negotiate a short sale in case he's unable to pay off the loan and intends to move out. In this case, the borrower should provide the lender with a hardship letter stating why he cannot continue to pay his mortgage and why a short sale is the best option for both parties. It's better to take help of a real estate agent or attorney to negotiate a pre-foreclosure sale with the lender's Loss Mitigation Department.
My credit score is 550 and I am selling a house. I owe 50k and I am looking to do a short sale for 45k should. How does short sale affect credit score.
legalbeagle,
It is upto your mortgage lender. he can ask deficit amount from you
It is upto your mortgage lender. he can ask deficit amount from you
My parents bought a house for my family and I to live in because house prices were so high...that was 5 years ago. We were paing the mortgage as rent payments to my parents and they were writing the check to the bank for the actual mortgage. Last month I was laid off from my job and we can no longer make the payments. The value of the house has declined by almost 1/2 the mortgage amount so selling it won't give enough to pay off the mortgage. What are some other options for them?
Unfortunately, I haven't been able to keep up with my monthly mortgage payments for the past 10 months. I've done every possible method, which may lead me to a loan modification with my lender, but today I received a notice notifying me that I did not qualify. therefore the only option suggested by my lender is a short-sale. I do not want to lose my home, but taking into consideration that I paid $670,000 and now is only worth $430, makes me meditate over the situation. On the other hand, I also fear for my credit to have a scar for a very long time and not be able to purchase a new home during my lifetime. What do you guys recommend?
I have my home in a short sale, Can I rent it out?
you probably could do so, hillary, but what kind of tenant do you expect to get? you'd have to settle for a transient, since you won't be owning the home pretty soon. right? keep in mind that as soon as you sell it, you won't own it any longer, and therefore wouldn't be able to collect any rent. you'd have to be upfront about your situation with anyone who even considered renting from you.
i think it's a waste of time to try it.
i think it's a waste of time to try it.
My property is far under water and I have a $50k HELOC that was granted back during the good days. Even if I paid off the HELOC, the property is still $100k under water. What are the credit implication of a short sale? I used to live in the property for 2 years, but now it is rented out. So far I have been making payments, but see no rebound in 3 years when interest only loan expires. Why would I continue paying now if refinancing is dead?
Hi,
You can request the lender to allow you to short sell the property. A short sale is a good option as it can help you avoid a possible foreclosure. But you ought to remember that if you fail to repay the loan in full from the short sale proceeds. You will remain responsible for the deficiency. If you want to short sell the property, you need to send hardship letter to your lender and request them to accept a short sale.
You can request the lender to allow you to short sell the property. A short sale is a good option as it can help you avoid a possible foreclosure. But you ought to remember that if you fail to repay the loan in full from the short sale proceeds. You will remain responsible for the deficiency. If you want to short sell the property, you need to send hardship letter to your lender and request them to accept a short sale.
My mortgage company (Chase) contacted me about a refi offer. As it turns out they want to take 15k off my principle and give me a lower reate. Seemed to good to be true...I will have to pay taxes on the 15 as income and what about my credit score?
How long before your credit would be begin to get better after a short sale?
tle, as long as your credit report doesn't contain other derogatory information, and you continue to make timely payments on any other indebtedness you have, your credit report will improve as soon as the next round of updates takes place. that's not to say you'll see a major improvement, but the simple act of making payments on time will always provide a benefit. the only caveat i will add to this is that you will need to avoid frivolous inquiries. don't go applying for any credit, as this will be adverse to you.
will a morgage company generally allow you to sell your house for less than you owe on it and then repay the balance left in payments?
I have a decent credit rating (740) and have very sizable credit limits on my credit cards $12K per card. I have not been late on any payments including my mortgage, but need to move out of state due to loss of job and legal non-compete issues. Will the short sale (or possible foreclosure) have my credit cards either revoked or have the limits dramatically reduced, even if I stay current on all the credit card payments?
To Kathy,
A mortgage company would generally not allow you to sell your house for less than owed and then repay the remaining balance in payments. But given the market condition, many lenders are now allowing borrowers to short sell the house. It depends on your lender if they will accept a short sale.
To NV Guest,
If you stay current on your credit card payments, the short sale or the foreclosure will not affect your credit card debts. However, whether you do a short sale or your property is foreclosed, your credit scores will be affected negatively and it will be difficult for you to qualify for new credit in near future.
A mortgage company would generally not allow you to sell your house for less than owed and then repay the remaining balance in payments. But given the market condition, many lenders are now allowing borrowers to short sell the house. It depends on your lender if they will accept a short sale.
To NV Guest,
If you stay current on your credit card payments, the short sale or the foreclosure will not affect your credit card debts. However, whether you do a short sale or your property is foreclosed, your credit scores will be affected negatively and it will be difficult for you to qualify for new credit in near future.
Hello I want to rent my property but I spoke to a realtor and she suggests that I do a shortsale. I know that if I rent my place I will not get enough monthly to cover the mortgage. The realtor claims that my credit will not be affected by a shortsale. Is there a certain amount of time for a shortsale property to be sold before the property becomes a foreclosure?