Can I Purchase After a Short Sale in Alabama?

Can I purchase after a short sale in Alabama? 

That is a common question on the minds of many Alabama sellers in today’s market.  The answer is, possibly.  In December 2009, HUD announced guidelines under which a seller who has completed a short sale can buy a new home utilizing FHA financing. 

Short Sales

According to FHA underwriting guideline, borrowers are not eligible for a new FHA loan if

·         They pursued a short sale on their principal residence simply to take advantage of declining market conditions, and  purchase, at  a reduced price, a similar or superior property within a reasonable commuting distance.

Borrowers will be eligible for a new FHA loan on a short sale, if:

·         The borrowers were current on the mortgage and other installment debts at the time of the short sale, and

·         The proceeds of the short sale serve as payment in full.

Borrowers who were in default at the time of the previous short sale will not be eligible for a new FHA loan for 3 years (based on the date of the pre-foreclosure sale).

This guideline applies to any seller where a previously owned property was sold for less than what was owed (i.e. a short sale).