I Have Completed My Short Sale. Part 2 of 3: My Credit Has Been Damaged By The Short Sale. How Can I Recover From This?

If you pursue a short sale or any other route of letting go of your home, you will inevitably have a ding on your credit score. Although the amount varies depending on which route you take or whether you are late on your mortgage payments in a short sale, having a ding on your credit score will make it difficult for you to utilize your credit especially when purchasing another home. What are mortgage companies looking for in your credit? How quickly can you purchase another home after a short sale? We will review these questions and a solution.

What are mortgage companies looking for in your credit?

As you may have already guessed, the dramatic changes to the housing market due to the subprime mortgage crisis have made lenders and investors much more stringent on their lending practices. The three areas lenders look at when considering financing your mortgage are credit score, income, and your overall ability to repay the mortgage. Large agency investors such as Fannie Mae changed their minimum credit score requirement from 580 to 620. Anything under 620 is considered high risk. Your local bank may require a credit score of up to 660 or higher which shows you how important credit scores are in your ability to obtain another mortgage.

How quickly can you purchase another home after a short sale?

Based on the numerous cases we have seen, homeowner’s are able to purchase another home much quicker in a short sale than after a foreclosure. As far as the time it will take to purchase another home, really depends on each specific situation. Our team has personally seen homeowners purchase another home within the first year if they’ve made all of their payments.  Multiple clients have bought their home within 2 years and more clients inside three years all without missing payments.  If you miss payments (per rumor), it is understood that Freddie and Fannie won’t finance you for 2 years before you are able to start shopping again.  Whether or not they finance will depend on how many missed payments and how good/bad your credit is.  The timeline in which you are able to purchase another home greatly depends on you and your proactive decisions from this point on.

How can I rebuild my credit after a short sale?

Seattleshortsaleblog have been endorsing Lexington law credit repair for some time now. It has proven to be the best credit repair company having removed 1,297,226 negative items from credit reports in 2010 including short sales, foreclosures, and bankruptcies. This company helps individuals rebuild their credit score to good standing which will expedite the process of being able to purchase another home. I suggest all homeowners whether they are thinking about a short sale, currently executing a short sale, or have finished a short sale, to call and get consultation regarding their credit.

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