Acquiring a home after a short sale is not impossible. It might be difficult to buy it but, getting a home loan after going through a short sale is very much achievable. A short sale occurs when a homeowner decides to sell their home for less than the amount that they owe the mortgage company, meaning not all of the liens or debts associated with the property have been settled. If this is the case, the seller is still responsible for the outstanding balance on those debts. Sometimes a homeowner does this when they need to move and they owe more than the house is worth. Other times, a homeowner may try to sell their home through a short sale in order to avoid a foreclosure, which is when the lender takes over ownership of the home.
There are steps a homebuyer can take to qualify for a loan in order to buy a house again after a short sale. Here are a few of them:
It’s going to take time – a short sale will most likely prevent you from getting a new home mortgage loan right away. The amount of time you must wait before applying for a new mortgage loan depends on the type of lender and your financial circumstances. For example, if you’re applying for a FHA loan after a short sale, you may not have to wait at all – but only if you were not in default prior to the short sale and you maintained a perfect history of paying your mortgage as well as other debts. The waiting time changes, however, when looking at the size of the down payment for your new home, as well as whether you’ve defaulted on your previous loan or if your credit is in mess, be patient.
Your credit is key – if you’ve gone through the short sale process, chances are your credit took a pretty substantial hit. But, if you’ve done all you can to improve your credit, be certain that you will own a home in the near future.
Don’t fall victim to a mistake – just like you would try to make sure your credit history is precisely correct and in good shape, it’s vital to make sure that your previous short sale was recorded accurately. A common mistake is incorrectly reporting a short sale as a foreclosure to credit bureaus. This is bad news because a foreclosure on your credit report will likely mean having to wait much longer to qualify for another mortgage.
Our team of professional mortgage brokers are capable of helping you get qualified for a new loan – no matter if it’s after a short sale or foreclosure.