I may have to "short sell" my house - does anyone know (1) alternatives? or (2) consequences?

Question

I'm worried the short sell will destroy my credit but don't know of any other options. Does any one know of any resources I can contact?

Answer 1

A "short sale" should not destroy your credit so long as you pay off the unpaid loan balance after the sale.  

Answer 2

Despite the other answers, a short sale will significantly damage your credit. Some lenders don't consider it as serious as a foreclosure, but it will hurt...a lot.

And once the short sale is concluded, there's no provision or process to "repay" what you shorted the lender. You've asked for permission to sell the property for less than you owe, and the lender has agreed (in a successful short sale). The lender's agreed to accept the loss. You don't own the house any more, and the mortgage no longer exists. Gone. Poof!

Alternatives?

--Pay your mortgage.

--Contact the lender and renegotiate the mortgage.

--Contact the lender and request forebearance--it's not a total renegotiation of the mortgage, but rather (usually) putting the arrearages at the end of the mortgage.

--Figure out a way to sell the house for what you owe.

--Sell the house for less than you owe, and you pay the difference.

--Allow the house to go into foreclosure. (That'll hurt your credit more than a short sale.)

--Receive permission from the lender to allow a deed in lieu of foreclosure. (You give the house to the bank and they agree not to foreclose.)

Good luck.

Answer 3

in a short sale you are short to close. so if you cannot get a loan somewhere else for the balance then yes it will affect your credit because you cannot deliver good deed. Once this happens you are still responsible for the balance but the bank has forgiven it and you will receive a 1099 and pay taxes on the forgiven portion plus any fees they tacked on  

Answer 4

It doesn't necessarilly hurt your credit - you'll still be liable to pay the difference to the mortgage company - as long as you make the payments - you're fine.

If you don't make the payments, then it's like any other bad debt (like not paying your credit cards).