- Real Estate
What Happens When You Short Sale Your Home?
When you sell your home for less than the remaining mortgage on it is, you are in a Short Sale. People simply can no longer afford the mortgage because it is simply not worth it. Banks do not like this.
In a Short Sale, your credit rating also takes a hefty hit, finding a rental may be an issue. It all depends on your credit rating before the sale. If your credit rating is higher than 640 when the short sale occurs, it will drop.If your credit history reveals that you are a good risk and have been for many years and the only blemish is the short sale, recovery can be made in as little as three years. Savvy landlords will see that but for the short sale blemish, your credit is good overall- you pay your bills. They are more likely to rent to you. They know you will be a decent tenant because you did own a home.
If you did a short sale between 2008-10, you should be able to re-enter the housing market and obtain a loan if your score is 640 or better. Many credit unions are lending to those involved in short sales. In some cases, one might be able to re-enter and obtain a home loan in a year of a short sale by working via a local bank, credit union or mortgage broker.
The key is that you want a credit of 640 or better, and in the 700's to qualify for any RE loan. You want the only blemish to be the short sale on your record and all other credit is paid on time with no late payments.