If I’m thinking about doing a short sale with my home, how long will my credit be affected?

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If I’m thinking about doing a short sale with my home, how long will my credit be affected?

How long before I could get another loan to buy a new home if I chose to do so?

Asked on October 25, 2012 under Real Estate Law, South Carolina

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

A short sale it is supposed to be listed as a “settled debt” on your credit report and will remain on it for about 7 years. Such a sale can reduce your credit score by roughly 200 points. Typically, a lender won't issue a mortgage until at least 2 years after an applicant's short sale. Additionally, a lender can ask for a "deficiency judgement", since a short sale will  result in the remaining mortgage balance not be fully paid off. So when obtaining a lender's permission for this type of sale, also make sure that they will waive their rights to a deficiency.


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