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Thanks for making it so clear and concise. All sellers who are considering a short sale ask this question and this explains the consequences to their credit rating very well.
Via Robert Rauf (REMN - Real Estate Mortgage Network (NJ)):
What Effect Does a Short Sale have on my Credit?
Every short sale seller wants to know the answer to this question. Naturally, there is no straight forward answer, but hopefully I can shed some light on the topic. Without a doubt, the impact of a short sale on an individual’s overall credit is less severe than a foreclosure. With a foreclosure, a potential homeowner must wait 5 years to get a conventional mortgage. With a short sale, the waiting period is only two years. For FHA financing, an individual must wait three years to get mortgage financing after a foreclosure or a short sale (where they were in default at the time of the short sale). However, if the homeowner was current at the time of short sale there is no waiting period for a new FHA mortgage (as long as the homeowner can verify that he/she did take advantage of declining values or purchase a home at a reduced price of similar or superior quality). Most homeowners (90%) are delinquent when they start the short sale process, but this is very good news for those that are current and get a short sale approval.
The other related question that goes along with this is what does a short sale do to my credit score? For those 90% of the people that are delinquent when they apply for a short sale, it’s really those mortgage lates and foreclosure action that end up adversely affecting the homeowner’s scores---not the short sale itself. If the mortgage is paid on time throughout the process and the short sale gets approved, then the credit report will simply show “Paid as Agreed, Settled for Less” (as long as the deficiency is forgiven). This by itself should only affect the credit score nominally. There are so many factors that go into a credit score (i.e. trade lines, trade history, balances, number of accounts, etc.) that there is no way to determine “how many points” will my score drop?
In summary, a short sale can affect a person’s ability to get financing in the future. However, it is a better alternative than a foreclosure---especially for those that have been able to maintain a clean mortgage history. With the thousands of homeowners who have already received short sales, and the countless numbers that will get them in the upcoming years, the parameters stated above are likely to change again.
Have a great week!
Rob
Robert Rauf
Mortgage Loan Originator
NMLS ID# 248937
www.RobertRaufHomeLoans.com or my blog: http://activerain.com/blogs/rrauf
(732)223-1630 x102
RRauf@REMN.com
Since 1987 I have been helping my clients fulfill their dream of home ownership!
Real Estate Mortgage Network Inc.
Real Estate Mortgage Network, Inc. is located at 16 Madison Avenue, Building 2 Suite 2D Toms River, NJ 08753. NMLS #6521. New Jersey Licensed Lender and Mortgage Banker #L041053. Visit www.REMN.com for more information.
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Third Creek condo for sale. Prime location at Third Creek Condos overlooking the creek and private wooded area. This Third Creek condo has 3 bedrooms, 3 full baths, vaulted ceilings, river rock fireplace and large deck with view of the private wooded common area. Third Creek Condos have a spa, pool, tennis court and club house plus is walking distance to the Championship Golf Course. Third Creek condo #133 is offered at $687,000. Full privileges to all amenities of Incline Village which includes free access to private beaches, discounts at Incline Village golf courses, Diamond Peak Ski Resort, and Recreation Center with indoor pool. Click for other condos for sale in Incline Village.
Peg Augustus, Realtor - Lakeshore Realty, Incline Village, NV
peg@lake-tahoe-homes.com www.lake-tahoe-homes.com 888-388-5488 toll-free
Third Creek condo #133 exterior
Third Creek condo #133 deck
The Incline Village (at Lake Tahoe) real estate market is out-performing the national trends we often hear or read about in the national media. Certainly our market is off compared to other years, yet property values remain steady and sales activity in various price ranges is excellent. What we have not experienced in Incline Village, in my twenty-eight years of marketing real estate, is any significant number of foreclosures and I know of no properties going into foreclosure at this time in Incline Village, contrary to many other areas of the country. In terms of median selling prices, Incline Village properties continue to reflect a good investment. For example, in 2003 the median selling price for a house was $795,500 while today, the median selling price for a house is $1,245,000. With condominiums, the median selling price in 2004 was $405,000 compared to $570,000 in 2007. While there is a good variety of both houses and condos on the market currently, there is not an over-abundance of listings flooding our market. There are about 486 total listings currently (includes houses, condos and free-standing townhomes), compared with an average of 350 in the last five years when properties were selling more quickly. However, in the late 1990's, the average number of listings was around 930 and at that time we didn't think that was excessive! Regarding mortgages, according to the leading mortgage brokers at Lake Tahoe, loans are definitely still available at attractive rates and those borrowers with good credit scores and a traditional 20% down payment are not having any trouble qualifying for loans.
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Peg Augustus
Incline Village,
NV
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Lakeshore Realty
Address: 954 Lakeshore Drive, Incline Village, NV, 89451
Office Phone: (800) 954-9554
Cell Phone: (775) 336-8631
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