If I go through with a short sale, how long will I have to wait before I'll be eligible for a new mortgage? I can't afford my home anymore and would like to get something less expensive.
There are many moving parts with a short sale. Different banks have different proceedures. One common thread is that they are not a quick sale and often even after all documents have been signed the deal will fall through. Your question on how will it effect your credit score is also it depends. If you are less than 60 days behind than you will see less of an effect on your score than if you are over 60 days. For those over 60 days it is essentially the same as forclosure and could effect your credit score by 200-300 points. There is also one more critical element to a short sale there must be a documented hardship such as loss of job or reduction in income for the bank to agree. They will not just sell your house for less than you owe.There are some relief programs that are working through the government that may help if you just have tight cash flow. If you are able to get a short sale approved I would plan on renting for several months and pay all of your bills on time and let your credit recover.