Short Sale Opportunities For Underwater Homeowners–Effects On A Credit Score And Buying After A Short Sale

Homeowners who are in a situation where their property value has dropped and they are now facing an underwater mortgage have attempted to work out a short sale deal with their mortgage servicer. There have been homeowners who were able to find a buyer for their property, which had decreased in value, and as a result of their bank agreeing to a short sale of their property, these individuals have been able to sell their home and avoid having their bank pursue them for costs which were unmet.

Obviously, the short sale agreements which allow homeowners to sell their home at a loss but have their servicer consider the short sale as a full payment have put many in a beneficial position as underwater mortgages have led many homeowners to face the possibility of foreclosure. Homeowners who may have had an adjustable-rate mortgage, as an example, could have had mortgage payment difficulties arise when their property value decreased.

While many servicers require that homeowners first be considered for a home loan modification payment reduction plan before a short sale is offered, homeowners who have successfully completed a short sale often worry about future buying opportunities and their credit score. One problem that is faced concerning short sales is that they can affect an individual’s credit score and their ability to buy at home differently.

It goes without saying that a homeowner who was having difficulty meeting their mortgage payments due to an underwater mortgage will, inevitably, have seen a drop in their credit score due to missed payments on their home. Despite the fact that a short sale may be granted, homeowners will still see a drop in their credit score as a result, which would obviously cause problems for them concerning the purchase of a new home in the future.

However, some homeowners who have participated in a short sale due to factors like an underwater mortgage or a sudden loss in their income, may be able to reenter the housing market in a shorter period of time if their credit score did not take a substantial dip and they are presently in a stable financial position. While this may be rare, homeowners who had an excellent payment history on their mortgage but suddenly came upon a difficult financial situation due to problems related to unemployment or their underwater home loan situation may not be viewed as a risk by certain financial institutions.

Yet, financial advisers have still suggested that homeowners who are considering a short sale speak with their mortgage servicer or even consult a housing counselor before they proceed as their particular situation could cause their future home buying opportunities and credit score to fair differently than another homeowner.  Homeowners who are having trouble making their mortgage payments or foresee difficulties in the coming months may stand a better chance at either finding an affordable mortgage payment plan or foreclosure alternative option for their personal situation if they contact their servicer early.