Compare the credit hit we will take for short sale as oppose

kroyusuk · Joined: 23 Nov 2007 Posts: 1 1.38 Dollars($)

We bought a house in MI. Then I moved for my job and we could not sell it. We tried for several years, but no offers, so we rented it, while buying and living in a home in VA. Recently, our MI tenants skipped out, and I have been carrying both mortgages for some months. Can't anymore. I have just submitted papers to the mortgage company petitioning for a short sale. I have heard about deed in lieu. At this point, I just have to get out from under this as I need to focus on the house we live in. What will the effect on our credit be for a short sale? For a deed in lieu? Which on is more damaging?

adonis · Posted: Fri Nov 23, 2007 9:23 pm Post subject:

Welcome kroyusuk,

I think a deed in lieu is more damaging because there you don't give a try and arrange for something to pay off a part of your debt at least. But in short sale, you do try to sell your home and repay the debt as much as possible and if the market goes well, you might even be able to cover the balance you owe with the sale price.

larry · Joined: 27 Jun 2007 Posts: 3328 473.40 Dollars($)

Hi kroyusuk,

Welcome to this forum.

I agree with Adonis here. Deed in lieu of foreclosure will affect you credit more than short sale because you have at least tried to take the initiative to sale the house and pay off the debt as much as you can.

Deed in lieu will drop your more than 100 points and Short Sale will drop your points just about 50 to 80. And the good news is that you can qualify for another mortgage after 18 months of the short sale.

Feel free to ask if you have any further questions.

Thanks,
Larry

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