Mortgage Heloc/Short Sale..

Question

Refinanced in 12/2005 pulled a heloc in 11/2007 through BofA i didn't with draw the money until about 5/2008. i with drew $115k in California. What happens if i short sale the property now. Will they come after the the $115k. How long will it take to reestablish credit? thanks

Answer 1

The HELOC and the principal balance on the mortgage will be added together as the debt owed on the house. A short sale would and should include the equity line debt.  A short sale is way better than a foreclosure but don't expect to buy another house within the next couple of years since it will hurt your credit score pretty drastically.  

Answer 2

If any of the lenders foreclose, you will not be able to buy for 7 years.  It's actually worse than a bankruptcy on your credit record.  If you can get all of the lenders to agree to a short sale, you can reestablish your credit and buy again in 2 to 3 years.  

With the HELOC now outstanding, it will be more difficult to get a short sale approved, because now two lenders have to agree to it.  Why would you have taken money out of a HELOC just recently if you knew that you needed to sell the property?

Good luck.