Posted to: Economy

Struggling homeowners worry about credit score

Aye aye aye. It’s a sign of the times. Over the last year and a half, the mortgage market has undergone more changes than in any comparable period since the Great Depression of the 1930s. The current housing market malaise has some homeowners up in arms. With the threat of losing their house on their shoulders, the idea of burning their credit is unnerving.

Just how do Morgage Lates, Short Sales, Foreclosures and Bankruptcies affect your credit?

Vince Wirthman of 1st Western Home Loans in Berkeley gave me the following information:

Mortgage Late Payments:
1. Credit score can drop 100 – 180 points.
2. Other credit interest rates could be affected (credit cards, equity lines).
3. No new mortgage for 12 – 24 months, depending on the circumstances.

Short Sale (Preforeclosure sale):
1. Credit score can drop 180 – 250 points.
2. Other credit interest rates could be affected.
3. No new mortgage for a minimum of 2 years, depending on the circumstances.

Foreclosure:
1. Credit score can drop 180 – 250 points.
2. Other credit interest rates could be affected.
3. No new mortgage for 3 – 7 years, depending on the circumstances.
4. Will need a minimum of 680 credit score and 10% down on next purchase.

Bankruptcy:
1. Credit score can drop 200 – 300 points.
2. Other credit interest rates could be affected.
3. No new mortgage for 2 – 4 years, depending on the circumstances and type of bankruptcy.

Vince can be reached at (510) 527-2840.

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