Qualifying for a Mortgage After a Chicago Short Sale
If you found yourself upside down in your Chicago mortgage – owing more on your home than it is worth – and unable to make your monthly payments sometime in the past few years, you are not alone. Foreclosure and short sale rates in Chicago and nationwide are higher than ever before, and do not appear to be decreasing in spite of low interest rates and legislation aimed at assisting homeowners.
Oftentimes, walking away from a mortgage – either through foreclosure or short sale in Chicago – is the right decision for overwhelmed homeowners. But after they have made the decision, many question how it will effect their prospect of home ownership in the future.
Chicago Foreclosure or Short Sale: Now What?
According to the Chicago Tribune, the effect on your credit varies. According to the Trib, “various credit rating agencies have different approaches to determining ratings. More significantly, once you start falling behind on your monthly mortgage payments, your credit rating is already falling, so its difficult to separate the bad credit from the impact of a short sale [however,] there is no significant difference in score impact between a short sale, deed-in-lieu or foreclosure.”
The longer you wait to purchase a home after a foreclosure or short sale, the more likely it is that your credit will have recovered and you will be able to obtain a Chicago mortgage.
Additionally, you may be so focused on your Chicago short sale or foreclosure that you may completely overlook other black marks on your credit report. For this reason, Forbes.com recommends that you “understand your credit scores. You can get an idea of where you stand using a tool like Credit.com’s free Credit Report Card or by purchasing at least one of your FICO scores. FICO scores are the most commonly used scores in the mortgage loan evaluation process.”
The best way to determine whether you are eligible for a Chicago mortgage in spite of a recent foreclosure or short sale is to fill out a Chicago mortgage application.