What Happens To Your Credit if You Stop Making Your Mortgage Payment

What Happens To Your Credit if You Stop Making Your Mortgage Payment?Credit Pain

What happens to your credit score if you stop making your monthly mortgage payments? I found out some useful information from Tim Duval, a Mortgage Loan Consultant, with WrStarkey Inc.

Short Sale: A short sale will strongly hurt your credit score. The vast majority of lenders will not approve you for a mortgage for at least 12 months, maybe more, after the short sale. A short sale is, you own your home but have stopped making payments, and have sold the home to a buyer, at a lender approved reduced price, that is lower than what you owe on the property.

Foreclosure: A foreclosure will strongly hurt your credit score. It is very similar to a short sale. The vast majority of lenders will not approve you for a mortgage for at least 12 months, maybe more, after the foreclosure. A foreclosure is, you own your home, have stopped making payments, and the lender has foreclosed on the property and taken possession.

Behind in Payments or Skipped a Payment. Unfortunately, this also can impact your credit scores by reducing your score approximately a hundred points. Right now, lenders like to see a 720 credit score for a home purchase, so a reduction of 100 points to 620, may cause difficulty in purchasing a new home or getting a car loan.

What can you do? There are some great programs offered by Douglas County including a Foreclosure Mediation Program. I would think all the counties would have something similar but Douglas County will sit down, meet with you and offer mediation between you and your lender.