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My home is currently worth $55,000 but we owe $127,000. Our home was purchased in 2006 on a Conventional, 30 year 6.5% loan. The loan is not a Fannie or Freddie Mac owned loan. Our loan-to-value ratio is 192%.

We are planning to short sale. However, we are current on all of our payments, but the house is a 2BR/1BA home with a 1 car garage (1050 sq ft) that we have been trying to rent in order to avoid a short sale, but have not received any offers. I think we are priced too high for what we have.

So we are planning on doing a short sale. If we have a credit score of 700, how much will a short sale affect us to the point of preventing us from getting a VA Home Loan later? I am a military veteran.

Dheer
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From MyFICO:

A foreclosure remains on your credit report for 7 years, but its impact to your FICO® score will lessen over time. While a foreclosure is considered a very negative event by your FICO score, it's a common misconception that it will ruin your score for a very long time. In fact, if you keep all of your other credit obligations in good standing, your FICO score can begin to rebound in as little as 2 years. The important thing to keep in mind is that a foreclosure is a single negative item, and if you keep this item isolated, it will be much less damaging to your FICO score than if you had a foreclosure in addition to defaulting on other credit obligations.

(personal note - I tip my hat to you, sir. Regardless of party, we owe our Vets a debt of gratitude. If I had my way, a VA loan would ignore the past short sale. I wish you well. And thank you for serving)

JoeTaxpayer
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