By: Gordon Thomson
The dream of homeownership doesn't have to end when you sell your home through a short sale. Underwater homeowners, who sell their homes for less than what they owe, can qualify for a new home loan again.
In today's tight lending environment, many homeowners tend to think it's nearly impossible to qualify for a mortgage after a short sale, however
Lenders are hearing from more and more former homeowners who can’t wait for the next opportunity to buy.
After a short sale you generally have to wait at least two years to buy again but the time frames depend on the type of loan you seek:
Conventional loans require a four-year wait time if the circumstances were job loss or illness, otherwise it could be a seven-year wait time.
FHA loans require a two to three-year wait period; however, under certain circumstances FHA has a loan product that requires less wait time if you had a short sale but didn’t miss any payments.
After the waiting period, borrowers can qualify for the same FHA loan as the person who never had a foreclosure or short sale.
The next surge of home buyers will be these former homeowners who will be able to qualify again.
As a former home owner you should use the interval to rebuild your credit, establish good spending habits and start saving towards the day you can once again become a homeowner and not renter. You should be rebuilding your FICO Score by paying close attention to credit limits and making sure the credit cards and installment accounts are paid on time.
Keep all your short sale records and be prepared to dispute inaccurate reporting’s to the credit bureaus, sometimes a lender will incorrectly report the short sale as a foreclosure, (a foreclosure on your records could extend the wait time to as long as seven years). This is a common error and needs to be fixed if possible before applying for a new loan or your loan could be declined.
Inaccurate credit reports are why short sellers must get and keep proper documentation from the lender at the time the short sale papers are signed,
With good records and a carefully prepared letter explaining why you had to undergo a short sale seek out a lender who will pre-approve you for a loan; FHA lenders are usually the most forgiving and offer the best rates within certain loan amounts.
Keep an eye on the calendar because your home buying future is still out there.
The dream of homeownership doesn't have to end when you sell your home through a short sale. Underwater homeowners, who sell their homes for less than what they owe, can qualify for a new home loan again.
In today's tight lending environment, many homeowners tend to think it's nearly impossible to qualify for a mortgage after a short sale, however
Lenders are hearing from more and more former homeowners who can’t wait for the next opportunity to buy.
After a short sale you generally have to wait at least two years to buy again but the time frames depend on the type of loan you seek:
Conventional loans require a four-year wait time if the circumstances were job loss or illness, otherwise it could be a seven-year wait time.
FHA loans require a two to three-year wait period; however, under certain circumstances FHA has a loan product that requires less wait time if you had a short sale but didn’t miss any payments.
After the waiting period, borrowers can qualify for the same FHA loan as the person who never had a foreclosure or short sale.
The next surge of home buyers will be these former homeowners who will be able to qualify again.
As a former home owner you should use the interval to rebuild your credit, establish good spending habits and start saving towards the day you can once again become a homeowner and not renter. You should be rebuilding your FICO Score by paying close attention to credit limits and making sure the credit cards and installment accounts are paid on time.
Keep all your short sale records and be prepared to dispute inaccurate reporting’s to the credit bureaus, sometimes a lender will incorrectly report the short sale as a foreclosure, (a foreclosure on your records could extend the wait time to as long as seven years). This is a common error and needs to be fixed if possible before applying for a new loan or your loan could be declined.
Inaccurate credit reports are why short sellers must get and keep proper documentation from the lender at the time the short sale papers are signed,
With good records and a carefully prepared letter explaining why you had to undergo a short sale seek out a lender who will pre-approve you for a loan; FHA lenders are usually the most forgiving and offer the best rates within certain loan amounts.
Keep an eye on the calendar because your home buying future is still out there.
