Mar
11
Mark M asked:
If I make prior arrangements to pay any shortfall on the sale of my existing house with the bank, can I avoid having it affect my credit? I am considering a move from an overheated market where I am upside down on my mortgage to a stabilized, cheaper market where I’ll be able to afford a cheaper mortgage plus make regular payments to settle any shortfall. I’ve heard that banks won’t consider a short sale until you’re behind on payments. Would they consider it if I’m a good credit risk with solid income and room to pay off the difference? I am assuming that if I can scrounge the $ beforehand, I’m best off to offer a seller 2nd to a buyer to make the bank whole, right? I need to move for a job, and the market where I live is DEAD.
Casey, don’t misunderstand–I love my bank. I’ve bought 3 houses with them. That’s the whole point. I need to move and I can’t make enough to pay off the mortgage in the sale. All I want to know is if I can work out an arrangement that will satisfy them and not nuke my otherwise great credit!
Felicitas
If I make prior arrangements to pay any shortfall on the sale of my existing house with the bank, can I avoid having it affect my credit? I am considering a move from an overheated market where I am upside down on my mortgage to a stabilized, cheaper market where I’ll be able to afford a cheaper mortgage plus make regular payments to settle any shortfall. I’ve heard that banks won’t consider a short sale until you’re behind on payments. Would they consider it if I’m a good credit risk with solid income and room to pay off the difference? I am assuming that if I can scrounge the $ beforehand, I’m best off to offer a seller 2nd to a buyer to make the bank whole, right? I need to move for a job, and the market where I live is DEAD.
Casey, don’t misunderstand–I love my bank. I’ve bought 3 houses with them. That’s the whole point. I need to move and I can’t make enough to pay off the mortgage in the sale. All I want to know is if I can work out an arrangement that will satisfy them and not nuke my otherwise great credit!
Felicitas
Comments
4 Responses to “Can I avoid a credit hit on a short sale?”
Move , get a job, rent the past house, rent the new house. Save up every penny and pay only the bills… don’t give anything away in a quit claim until it is lost.
If I’m reading your question correctly, you are going to sell your home for less than the balance of the mortgage but pay the difference to the bank. If that’s the case, your credit will not be impacted.
The problem is not that the house sells for less than is due. The problem is when the bank is left with less than the balance owed. In your scenario, the bank will get the full balance owed, so there is no credit issue.
Banks generally won’t consider a short sale unless you in dire financial straits, and a foreclosure is inevitable. A bank may consider what you propose, but it wold probably depend on the amount of the shortfall and if you could provide as some sort of collateral for the difference. It really isn’t in the bank’s best interest to take a loss on a house the owner can still afford, and take the risk on you not being able to pay the difference.
It never hurts to ask, but before you do have any payment plan on paper projected out before you talk with the bank.
You can actually sell your house short without it hurting your credit, but it is very rare. You have to prove that you can no longer afford your house. If you can make the payments and afford them, the bank will not allow a short sale… in fact, they will pursue you heavier if you stop paying.
Be careful… it’s not the banks fault that you have buyer’s remorse for buying an investment that lost you money… you simply borrowed the money from them to buy this house… it’s not their fault it dropped in price.