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.
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).