Can you get a GradPLUS with a short sale in your credit report?

BobtheDoc

Just a little pressure...
5+ Year Member
Aug 2, 2010
57
1
Phoenix, AZ
Status
Medical Student
Doing the math and finding I am going to need a gradPLUS loan pretty much wherever I end up going...

Trouble is I have a condo I'll have to sell before starting and it'll probably have to be a short sale due to the wonderful housing market these days...

Does anyone know if I could still qualify with a short sale on my credit report for a gradPLUS loan?

It seems that approval is not based on a credit score, but rather the absence of particular negative items - when I called the federal loan originators the rep told me as long as the word "forclosure" is not part of the short sale agreement it would be fine. She didn't seem that sure about it though...

(Double posting this in the financial aid area because that forum doesn't see too much traffic...)
 

Sid Farkus

The Best in the Business
Sep 27, 2010
84
0
My understanding is that one of the benefits of a short sale is that it doesn't negatively affect your report. Your score will go down due to the removal of the mortgage, but that alone won't prevent you from government [grad student] loans. Idk about the rest of your credit history, so I don't wanna say you're a shoo-in or anything.

Trouble is I have a condo I'll have to sell before starting and it'll probably have to be a short sale due to the wonderful housing market these days...
This part seems a little strange to me. Are you underwater and want to inflate your asking price to match your loan balance?? But you know you won't get any takers? If so, the market may not be entirely to blame... Cheaper condo, larger down payment, paying MORE than the monthly, etc. Like I said, I don't know your situ, though.
 
OP
BobtheDoc

BobtheDoc

Just a little pressure...
5+ Year Member
Aug 2, 2010
57
1
Phoenix, AZ
Status
Medical Student
This part seems a little strange to me
It was sarcasm:D

The point of a short sale is when your property is undervalued by the current market in respect to the mortgage lien on the property, ie being "upside down." A short sale is where the bank agrees to take less than the full mortgage value.

And yes, it does negatively impact your credit. Anytime you borrow money and don't pay it back negatively impacts your credit.
 

gravitywave

fourth year
Dec 19, 2009
2,078
9
s/p ERAS
Status
Medical Student
what the rep told you is right, but this is a tricky one. foreclosure and bankruptcy will kill your GradPlus app, i know that.

you're right, it will negatively affect your credit. and depending on what your lender says and your state laws, you might still be on the hook for the leftover balance. what's your plan for that if you're in med school?

the best thing would be to just cough up cash at closing and walk away. but you might not have that kind of liquidity... sorry man :(

try calling back and see if you can get a more knowledgeable rep? You're also aware that you're eligible at least $40K/yr in Staffords for med school before you have to go to GradPlus, right?