A short sale is the sale of a house in which the proceeds fall short of what the owner still owes on the mortgage. The lender agrees to a payoff of a lesser amount than is actually owed, even on a current mortgage, to facilitate the sale of the property to a third party.
If a property is surrendered or included in a bankruptcy, it is considered a foreclosure and must follow the foreclosure seasoning rules.
A foreclosure is a legal procedure in which a mortgaged property is sold by the trustee to pay the outstanding debt following a default. A foreclosure is evidenced by the delinquency status on the credit report or a Verification of Mortgage, a notice of default or a notice of sale filed against the property.
Now here are the basic guidelines as to when you can buy again AFTER a short sale with conventional financing:
Foreclosure – Home was given back to the bank – no owner participation.
- 7 years from the date the foreclosure was completed and transferred back to the bank if the borrower had NO extenuating circumstances. Minimum FICO of 680 required.
- 3 years from the date the foreclosure was completed and transferred back to bank with acceptable extenuating circumstances, AND 10% down payment. Primary home purchase and rate/term refinance only. Non‐owner and second homes not allowed
Short Sale / Deed in Lieu of Foreclosure
Short Sale- Home sold, but sales price didn’t cover amount owed.
Deed‐in‐Lieu- Home returned to lender in exchange for canceling the loan.
- 7 years from date sale closed and transferred to new owner or transferred back to the bank for less than 10% down payment and minimum FICO 680.
- 4 years from date sale closed and transferred to new owner or transferred back to the bank with 10% down payment and minimum FICO 680.
- 2 years from date sale closed and transferred to new owner or transferred back to the bank may be possible with acceptable extenuating circumstances and 10% down payment.
Bankruptcy Chapter 7- Debts are discharged through BK, client does not pay any debts owing.
- 4 years from date of discharge
- 2 years from discharge date may be possible with acceptable extenuating circumstances
Bankruptcy Chapter 13- Debts are paid back on a monthly scheduled payment plan by client.
- 2 years from date of discharge or
- 4 years from dismissal date
If you have experienced any of these events and are ready to get back into the housing market, we are here to help! You can contact me either via email at Garrick.werdmuller@guaranteedrate.com or direct 510-282-5456.
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