Many Thousands of Americans have had to sell their house through a short sale in the past few years. Who would have guessed a few years back that prices would plummet like they did? Here in Brevard County, home prices in some areas have been more than cut in half.
If you had to sell your house short, more than likely the credit report will show a mortgage settled for less than owed. If you go to apply for a mortgage, there are new rules surrounding this type of derogatory credit. The new rules for Fannie Mae says that it must be 2 years from the completion of the short sale, with no exceptions. This is fairly straightforward. If you had a short sale in the last two years, you are ineligible for a loan which is bought by Fannie Mae (that is all conforming loans, or anything that is not government).
US Department of Housing and Urban Development (HUD), who determines the rules for FHA loans, has not made a ruling on short sales as of when this article was written. While this may sound promising, the majority of the lenders are treating short sales on FHA loans like they do on conventional loans. However, there are a few lenders out there that will entertain a short sale if there are extreme extenuating circumstances prior to two years. Otherwise, like on a conventional loan, you must wait two years.
So here is the long and short of it: if you have recently experienced a short sale, you will be ineligible for a conventional loan for at least 2 years; you may be eligible for FHA financing, however, you will have to prove that there were extenuating circumstances. These extenuating circumstances could include loss of job, death of a wage earner, hospitalization, or some of these sorts. Additionally, you cannot have had any mortgage lates in the last year. For a loan to be considered prior to 2 years, it must be strong.
There is life after short sales, however, it seems as though for loan qualification purposes, it starts after 2 years for most. This is really not that long of a time, and there are probably some people who went through a short sale a few years back that are ready to buy again. For more information, contact Joe Harris.
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