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rumtum08 · Joined: 25 Nov 2008 Posts: 1 1.62 Dollars($)

Will foreclosure on a rental effect my credit card interest rate?...I have a mortgage on my primary residence (mobile home) and a mortgage on a rental house. Its getting harder and harder to keep tenents in the rental. What are the ramifications if the rental is foreclosed on and will it affect my credit card interrest rates? The state is Colorado.

smithsussane · Posted: Tue Nov 25, 2008 8:18 pm Post subject:

Hi rumtum!

Welcome to forums!

If the rental property is foreclosed, your credit will get badly affected. It will lower by at least 250 points. Moreover, if the lender cannot recover the dues from the sale of the property, he may place liens on other properties as well.

The credit card companies generally include clauses which states that in case of a default in any other debt, the interest rates of that particular card may increase. However, this situation mainly happens with other credit cards rather than mortgage loans.

You can try out the options of deed in lieu or short sale. Both the processes are quite similar. The lender will try to sell the property and recover his debts. There are chances that the lender has to sell the property at a lower amount. So there remains a deficient amount. In case of deed in lieu, the lender forgives this deficient amount whereas in case of short sale, you need to pay it to the lender.

Feel free to ask if you have further queries.

Sussane

Niicss · Posted: Fri Nov 28, 2008 3:43 am Post subject:

Hi rumtum,

I don't think your credit card interest rates will get affected due to foreclosure on a rental property. However, there are various ways to avoid foreclosure. Why don't you check them out and try for anyone of these?

Thanks.

carlpruitt · Posted: Sat Nov 29, 2008 11:23 pm Post subject:

Most credit cards include a "cross-default" clause in their terms of use which you agreed to by using the card. That means if they happen to review your credit and it is no longer as good as it was when you obtained the card, they can change the terms and increase your rates.

Since the foreclosure will no doubt lower your credit score, it will probably affect your credit card interest rates. It wouldn't matter which state you live in.

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