Mortgage after Short Sale – How to Qualify

Mortgage after Short Sale

Many homeowners ended up losing their homes to short sale or foreclosure due to the housing crash of 2006. If you were one of those affected, and are now thinking of becoming a homeowner again, this article is for you.

If you sold your previous home through a short sale you, you may qualify for a new home loan right away depending on how you went about the short sale of your previous home.

Mortgage lates

Were you late on your mortgage when you did a short sale on your home? Did you default on your mortgage for multiple months?

FHA or the the Federal Housing Administration allows for borrowers to qualify for a home loan right after a short sale, only if the borrowers were never late on their previous mortgage. Therefore, if you answered yes to the above question, you will unfortunately have to wait a minimum of 2 years (non-fha loans only) before you can qualify for a home loan again.

Waiting Period

As discussed above, most lenders require that you wait a certain amount of time after a short sale, before buying a home again. Here are the details:

Most loans under the amount of $417,000 (single family) are sold by lenders to Fannie Mae, or Freddie Mac, unless the loan is a FHA or VA insured loan.

Fannie and Freddie Mac have a strict waiting period requirement of a minimum of 2 years or 4 years for borrowers with a short sale history. The amount of time is determined partly on the down payment availability.

If you are making a 20% down payment on your new home, then the waiting period is 2 years. If you are only putting 10% as down payment, then the waiting period for a Fannie Mae or Freddie Mac loan is 4 years. There maybe some exceptions where you may be able to qualify for a loan within 2 years and with 10% down payment only with excruciating circumstances.

Under FHA, or VA loans the waiting period is 3 years if you had defaulted on your mortgage on your short sale home. The 3 year waiting period is regardless of the down payment.

To get the complete information, read the article:mortgage eligibility after short sale here.

It is extremely important that you speak with a qualified, and an experienced mortgage professional and provide him/her with the details about your recent short sale, so that the mortgage professional can create a path to your home ownership. This will include looking at your credit report, your income, liabilities, and assets, and also your employment status.

Right now is probably the best time to buy a home due to low prices, and incredibly low rates. If you create a plan, and take the right financial steps, you can become a proud homeowner once again, even with a prior short sale. The housing market is starting to turn around, the economy is picking steam, and with employment increasing, the current economic environment has created a unique opportunity for you to build equity through home ownership. Happy house hunting!

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