After short sale can i buy a house

Edited By Suzanne De Vita. Edited by. Suzanne De Vita. Suzanne De Vita is the mortgage editor for Bankrate, focusing on mortgage and real estate topics for homebuyers, homeowners, investors and renters. Share this page. Bankrate Logo Why you can trust Bankrate. Bankrate Logo Editorial Integrity. Key Principles We value your trust. Bankrate Logo Insurance Disclosure. The consequences of a short sale Often, a short sale is a way for a distressed homeowner to avoid foreclosure , which can have more severe financial implications.

You may also like How a mortgage broker can save you time and money. Mortgage rates crush it again, plunge to a new all-time low.

Unpaid federal workers can sidestep rules to apply for cash-out mortgage refinance. Rates expected to jump on Fed Day. Compare refinance rates. Actually, I would like a bit more to pay off all credit card debt. Does my accident qualify for an exception to get a loan?

Or, are we stuck waiting it out? A gift of equity is when you are given equity in a home to buy a home and the money does not have to be paid back. Normally, it is between relatives. This gift can cover the required down payment of 10 or 20 percent depending on your pre-approval. The key is this. I short saled my home on December 16th , the lender said that my loan will be approved by december 16 Can i look for new homes now and give offer now and close after December 16th or should I wait until December 16 to make an offer for a house or even to look for a house to purchase.

You can look and make an offer whenever you want but the application date for your mortgage must be after your waiting period would expire. It sounds like in this case that would be December 17th of I have a unique situation. I had to do a short sale 2. But recently my wife and her brother have inherited a home. The value of the home is approx , We only need 60, to pay off her brother. Being that there is a 3 year waiting period for a short sale to obtain a fannie mae is there any way to get a loan another way?

Any suggestions? For a home equity loan or line of credit, it that still fannie mae? Our credit has been flawless since the bankruptcy credit score is at about That being said, are home equity loans or lines of credit Fannie Mae backed?

Or could I try going to my bank? Definitely try your bank. Also, expect the terms to kind of stink. Home equity loans are not backed by Fannie Mae or Freddie Mac. I completed a short sale in AZ on a primary residence in October of Do to a divorce and reduction in pay.

I fell behind on payments on this house prior to the short sale. My wife has good credit also but her name is not on the California house as of now. I would like to take advantage of the low interest rates. Am I eligible to refinance the California house? The good news is, the FED started up another round of quantitative easing so rates should go up too high too quickly. I completed a short sale in Dec , unfortunately we were behind on payments. I was told it would be a two year waiting period before I could buy again.

Now I am reading they changed the law to 3 years? What can I do? It is not necessarily impossible for you to buy a home now. Does that make sense or am I being too much of a geek? We just tried to apply for a USDA loan and are running into some issues over the amount of money we make. Do I need to get court order for child support? Be on the lookout for an email from him. I just completed a short sale and a month later I was approved for an FHA loan for a new house.

My situation was a divorce. I have perfect credit and was never late on a mortgage payment. It was very easy to do and it is great that FHA is doing this.

I think another stipulation was the fact that I was buying a smaller home in a different area too. Still paying mtg and dont plan on missing any payments. Never late on any bills. I find that really annoying since this is a hardship relocation. Already have offer on the house after one week on mkt.

Hoping to close soon and move to new town. Would love to buy rather than rent. I assume we can buy again. Any ideas. Charles I am in the process of completing a shortsale. Will I be able to purchase Right away or will I have to rent? I am about to short sell my home. I know to buy a home I will have to wait at least 3 years to purchase again.

My 86 year mother owns her home outright, but is interested in selling it and purchasing a house together as she needs more care and attention. Her home sale would cover approx. Hello — I am trying to purchase a home after a short sale 2 years ago.

I am currently renting for an absurd amount and would like to get out of renting. Is there anyway possilbe that there would be something out there for me currently? The loan is co-signed with my parents one nearing retirement age and the other should already be retired but still working to help pay the bills. Is it possible to do a short sale without the bank tapping into my savings since I am a co-signer?

I lost my job soon after and have not regained my financial status to where it was before that time. The whole time we have been seriously contemplating short selling. It has been a very difficult time to keep up with the payments and we have used savings and borrowed money from family to keep on time with our payments. That being said, we are at a time now where we feel that very soon we will not be able to keep the house and may not be able to last more than a few months financially.

My credit is about average right now. My question is if I short sale my home, what is the time frame you think I would be able to get a new home loan if my circumstances were as follows…. What would your recommendation be? Does having an FHA loan discount any of the things I mentioned? Unfortunately having a FHA loan does matter. They currently have a written policy where you have to be at least 30 days to qualify for a short sale. Outside of private label mortgages i.

If you can document extenuating circumstances you might be able to qualify for a Fannie Mae loan after 2 years with 10 or 20 percent down. Otherwise it will be a 3 year wait. Can you please confirm? When replying to Donald, I was trying to keep it in the context of his specific situation. Thanks, very helpful sites.

Additional question — How do jumbo loans enter into the equation? Hi Charles, My wife and I were under water so to speak and were convinced by both our attorney and finance company that we had to stop making payments to get a short sale. This took 18 months. During that time I did eliminate all other debts leaving only the house as a bad credit mark. It has been a year since our short sale and I have retired and want to move from Florida to Tennessee. My FICO is about Is there any hope?

I have heard about prepurchase such as a lease option to buy but have not had much interest in the Cleveland, TN area. Any input is appreciated.

The least of these is 3 years due to the late payments but you probably already know this. This was at only one year after my short sale. It just shows never give up and be willing to work hard for what your family needs D. You were behind payments and still got a loan within a year? That is great. We are currently in short sale process 7 months in , and are now in closure phase with a buyer for our FHA loan serviced by BofA.

Shoot me a call in the evening sometime and I can walk you through some of this. I personally had a short sale and got my credit score up points just shy of a year later. Thank you for your information on buying a home after a short sale. I completed the short sale of my condo in December of Since then my earnings have increased and I am married again.

My wife and I have a house, but are looking at moving to another one. I have called several banks, but have yet to find anyone willing. Do you know of any? Wde had a condo in clearwater fl which we bought in 06 and I had to relocate in april of 09 due to job if I wouldnt had I would had lost my job and since I was upside down on my loan i was left with no option but to do short sale which we tried thru a specialist for 2and half years with no luck then we took everything in our own hand and did the shortsale by ourselves which was finalized this year in may and then the bank has put settled on my credit report my wife who taken chpt 7 in she did not get hit with that Now my question is will be able to buy a place after one year or will I have to wait for 3 years if I have to wait 3 years is there anybody here in louisville ky you know who could help us.

It would depend on whether or not there were late late payments on the mortgage and installment debts in the 12 months prior to the short sale. If there were, it would be 3 years. My husband was a stay at home dad when we bought our home so he was on the title but not on the mortgage.

I was self-employed, but after my income dropped substantially I changed jobs and my husband began working full-time. Even with the 2 incomes, we were not making enough to pay everything so I stopped paying the mortgage and applied for a payment modification. I was declined twice so we opted to sell the home. I was 12 months delinquent at the time my short sale was completed. I wanted to let you know that my husband was able to buy another house in September, despite my short sale in February without telling any lies.

Our old address was on his credit report and application. The original loan was underwritten through Michigan Mutual and immediately sold to Wells Fargo. It takes a careful underwriter to catch that trick so many miss it and loans go through. But that will be our little secret. Congratulations though.

Good evening- My husband and I are being relocated from California to Nevada with our current employer. We are attempting to do the best thing for our family while trying to think about our credit and the bank silly I know..

We are the one who found this memo and took it to both our realtor here in California and the broker we are attempting to purchase with in Nevada. The broker in Nevada is telling us there is a one year seasoning… and is pretty much saying theres no way to pre-approve or to purchase within a year.

Is this seasoning thing legit? You need to find another lender. Pingback: The Return of the Subprime Mortgage. Hello- I really like your articles- very helpful. We are trying to figure out if we can qualify for a home loan now that we have passed the 2 year mark of our short sale. We have heard that Fannie Mae allows for a loan after the 2 years seasoning if you can prove a hardship. Our hardship was that I was part of a job layoff when the company was going through bankruptcy.

We have relocated to Texas for my job and would like to purchase a home here. So, my question is if banks are really going by the Fannie Mae guidelines on the 24 months with a hardship and if that would qualify?

I love your articles- very interesting! I am hoping you can help me with figuring out what options, if any we might have. We passed the two year mark from doing a short sale on a house in California. The reason for the short sale was due to a job relocation and then a job layoff as the company went through bankruptcy. We have relocated to Texas for my job and would like to be able to purchase a home as rent is so much higher than purchasing.

Are any banks following these guidelines? I have not seen any lenders do these without getting an eligible automated underwriting decision. Our reason is my husbands job relocation as well as him having an accident had an amputation which set us back financially.

We listed our house back in February and received an offer in April We have been current on all payments, even draining our savings account to keep the payments current. Today, Bank of America is saying the FHA guidelines say that we must be 31 days past due to qualify for the short sale. So, if we do not make a payment for August in order to get the short sale approval, BECAUSE FHA says it has to be that way, will a 30 day late on our credit report prevent us from getting into another mortgage without a waiting period?

It is clear that our pay history is stellar, other than this process. Are there lenders that would consider this situation of ours, or are we stuck with a waiting period??? It makes no sense! Any help or guidance to a lender who could help our situation would be appreciated. We would be looking to buy again within a year after short sale if possible.

Charles, My ex and i short sold a house one year ago in NM. He lost his job and we went straight to the bank. We were told that due to a flood of defaults that if we did not become delinquent, that they would not even consider it.

So we became days delinquent on the mortgage prior to the final sell. I have never been late on any other payment and still have other revolving acocunts including a car loan. My credit score is back up to My current and I are interested in buying a house together in a year.

He has excellent credit and already owns a house. Do you know how my credit will do? Will I even qualify? Hi, Just had a question about getting a loan after a short sale. Back in I lost my job and my wife was staying home with our kids. Needless to say we short sold the house and started to rent. My credit score is middle of the road on the lower end. I would like to get in with as little possible down as possible! I have a chapter 7 bankruptcy in Which waiting period applies. Bankruptcy or shortsale.

Hi Charles, My husband and I had to move out of state for his job. We are selling our house in LA, but it may have to be a short-sale trying to avoid if at all possible but the value and what we owe are neck-in-neck. We have owned the house for 9 years. Two years ago my husband lost his job and we had a house fire all at the same time perfect storm.

We missed 3 payments during the period of unemployment. We were going to sell then but a realtor suggested we get a loan modification instead. We applied for a loan modification and were told the delinquent payments would be rolled into the modification.

The delinquent payments were all to be covered by the loan modification with our new loan principal. I am now afraid we received horrible advice. We are now trying to make things right by selling the house as we started to 2 years ago. I am worried however that those 3 delinquent payments from 2 years ago that the bank told us not to bother with because of the loan modification will now come back to haunt us if we end up having to do a short-sale.

We have been current on payments since that time. Your thoughts on our situation with the 2 or 3 year waiting period? My husband is a Veteran so he is eligible for a VA loan otherwise. The reason I am concerned about the year waiting period is that in our new area, it is more expensive to rent that to own rentals are hard to find. We are trying to get ourselves back on track financially by cutting our losses and reducing our expenses…but finding it impossible at every turn.

Thanks for your time. Funny you should mention using VA eligibility to buy after a short sale. This will really depend on how your payment history reflects itself on paper namely on the credit report. I think you might actually be in luck. These loans, called " conventional , conforming" loans, are eligible to be sold to Fannie Mae or Freddie Mac.

The waiting period for this kind of mortgage loan following a short sale varies, depending on the circumstances.

Your waiting period will be:. The amount of time you must wait to obtain a new FHA -insured mortgage varies, depending on your credit history and the reasons for the short sale.

You might not have to wait to apply for an FHA-insured mortgage loan following the short sale if:. If you were in default on the old mortgage loan at the time of the short sale, then you usually must wait at least three years before applying for another FHA-insured loan. You might be able to qualify sooner than three years if you can show that extenuating circumstances caused the mortgage default, like a serious illness or death of a wage earner.

You'll generally have to wait two years after a short sale before you can get a VA-guaranteed loan, but you might not have a waiting period if you made payments on time prior to the sale. For most other types of loans, like subprime loans or jumbo loans, waiting periods can vary.

Some lenders follow Fannie Mae's guidelines. You'll also need to have good credit. Notwithstanding the waiting periods, you must still establish good credit following a short sale to get a mortgage loan. So, your credit score, usually your FICO score , must meet the lender's minimal requirements to qualify.

Alternatively, while you might be able to obtain a new mortgage with a low FICO score, you might have to make a larger down payment or pay a higher interest rate. FICO is the most common score used in the mortgage-lending business.

Scores generally range from to A person's score usually varies depending on the model used to produce it and which credit reporting agency provided the underlying credit report.

For credit purposes, while this is somewhat damaging, it is certainly less damaging than a foreclosure. Short sales can also provide excellent opportunities for buyers to get into houses at a reduced price. Here are a couple of tips to help you make smart decisions when considering the purchase of a short-sale property. Most short-sale properties are listed by real estate agents and on real estate websites. Some listings may not be advertised as short sales, so you might have to look for clues within the listing, such as being subject to bank approval or giving the bank time to respond.

An experienced real estate agent can make a big difference in terms of both finding and closing short-sale properties. Holders of this certification have received specialized training in short sales and foreclosures, qualifying sellers for short sales, negotiating with lenders, and protecting buyers. Realize in advance that short sales are complicated, time-consuming transactions.

It can take weeks or months for a lender to approve a short sale and many buyers who submit an offer end up canceling because the short-sale process takes too long. Rules for short-sale transactions vary from state to state, but the steps normally include:.

If you are buying a house in a short sale with the intention of flipping it, the key to a profitable transaction is a good purchase price.

In real estate investing , it is said that the money is made in the buy. This means that a good purchase price is often the key to a successful deal. If you can get a property for a good price, you increase the odds of coming out ahead when it comes time to sell. You should be able to buy the property, put it in great condition, and sell it at a price where you can still make a profit. Investors need to be able to turn around and sell the house quickly—typically at below-market—and a good purchase price makes this possible.

The purchase price is only one important number, however. Costs to consider include material, labor, permits, inspection fees, trash removal, storage costs, and dumpster rentals. A good inspection before making the purchase can alert you to any large expenses, such as a cracked foundation, faulty wiring, or extensive termite damage.

Investors look at this number to determine whether a property has profit potential. These are homes that have recently sold in the area typically up to a mile away from the subject property that have similar features in terms of square footage, such as the number of bedrooms and bathrooms. Carrying costs are your expenses for holding onto the property. The longer you own the property, the more you will spend on carrying costs, which include:.

In order for an investment to be profitable, the sum of your costs the purchase price, repair and renovation costs, and carrying costs must be lower than the ARV. If your costs are close to or higher than the ARV, it will be difficult or impossible to make a profit. You can determine the potential profit by subtracting the purchase price, repair and renovation costs, and carrying costs from the ARV:. Under these guidelines, total investment purchase price, repair and renovation costs, and carrying costs should not exceed:.

The various investment levels are used to reduce risk in changing market conditions. You can risk more in a rising market because you are more likely to get your ARV or better when you sell. In a falling market, you are less likely to get your ARV, so your investment should be smaller. In real estate, a short sale takes place when an owner sells their house below its mortgage value.

This typically happens when the owner is under financial distress and is behind on mortgage payments. The owner is obligated to sell their home to a third party, while the proceeds of the sale go to the lender. The lender must approve the short sale before it happens. The process of a short sale can often take as long as a year due to the scale of paperwork involved.

In a short sale, the process is initiated by the homeowner. The owner will illustrate to the lender the extent of their financial distress through documents that may show a recent loss of employment, divorce decree, or bank statements.

After the lender agrees to move forward, the homeowner is responsible for finding a buyer. In a foreclosure, the lender initiates the process, essentially seizing the home after the owner has failed to make payments. The foreclosure process is generally faster than a short sale, as the lender seeks to liquidate the assets as quickly as possible. In many cases, buying a short-sale property can be advantageous for prospective buyers. However, it is important to be aware of some of the drawbacks involved.

Short sales can take a long time, with lenders sometimes taking months to approve the transaction. After the seller's approval, it may also take many weeks for the bank to approve the price.

If the bank believes that a foreclosure proceeding is more lucrative, it may reject the short sale and move forward with foreclosure instead. A short-sale property can provide an excellent opportunity to purchase a house for less money. In many cases, short-sale homes are in reasonable condition, and while the purchase price might be higher than a foreclosure, the costs of making the home marketable can be much lower, and the disadvantages to the seller less severe.

However, because of the lengthy process, buyers and sellers must be willing to wait.