Legal Question in Real Estate Law in New York
I live in NY state and my husband is divorcing me. It is unexpected and I am devastated. We just purchased our home 1 yr ago and it is now worth less than our mortgage, per several Realtors. Short sale has been recommended, but I am terrified of having my credit ruined. Now in my 40's, I have worked very hard to obtain my good credit score (780) after years of struggle in my 20's. Neither of us can afford the mortgage on our single salaries nor will we be approved to refinance individually.
If our only option, how badly will the short sale affect my credit score? My husband plans to declare bankruptcy on his credit cards and does not care if it affects his credit. How long after the divorce and short sale would I qualify to buy a home of my own or obtain a decent interest rate for auto purchase, etc.? I don't want to suffer complete credit damage as a result of my husband's choice for divorce. Also, we are 100% current on our mortgage payments. Should we continue to remain current so as to cause less damage to my credit?
Thank you in advance for your insight.
1 Answer from Attorneys
Yes, remaining current prevents damage to your credit - but, though this is unlikely, perhaps you can negotiate with your bank and arrange for a modification that gives you the space to make your short sale.
The short sale itself won't cause damage to your credit. What happens to the balance, if any, unpaid on your loan can.
On the other hand, some short term damage to a credit score isn't the end of the world - especially if you're still relatively young.
When you next try to purchase the key factors will be your then-current income as much as the rest of your credit picture.
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