FHA Loan After Short Sale Mortgage Lending Guidelines

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FHA Loan After Short Sale Mortgage Lending Guidelines

This BLOG On FHA Loan After Short Sale Mortgage Lending Guidelines Was Written By Massimo Ressa of Gustan Cho Associates 

A short sale is when a homeowner has a mortgage with a balance that is higher than the value of the home and gets lender’s permission to sell the home for a price below what they owe on the home.

  • The process of a short sale can be time consuming
  • Before a home can be listed as a short sale home, the homeowner’s lender needs to review the homeowner’s following credit and income profiles:
    • financials
    • amount the homeowner’s owes
    • market value of the home
    • homeowner’s potential future job stability and income
  • A short sale is an alternative to foreclosure
  • By cooperating with the bank, the homeowner can get out of their home without their lender coming after them for the deficit or shortage on what they owe on their mortgage note
  • The price their homes has sold for comparable to the subject property
  • Homeowners who are currently going through a short sale or have gone through a short sale can qualify for a FHA Loan After Short Sale if they meet the mandatory minimum FHA Guidelines
  • Need re-established credit and a minimum credit score of 580
  • 580 minimum credit scores is what is required to qualify for a 3.5% down payment home purchase loan.

Qualifying For FHA Loan After Short Sale

Once the short sale of home is finalized and reported on credit reports, credit scores will plummet by more than 100 points.

  • However, this drop is a temporary drop
  • As long as consumers have credit tradelines and maintain perfect payment history, credit scores will increase as time goes by
  • Consumers who do not have credit tradelines, they should immediately get three to five secured credit cards
  • For maximum effect, consumers should have at least a $500 credit limit on each of the secured credit cards
  • As consumers maintain a low credit balance on those secured credit cards and pay them on time, credit scores should definitely improve
  • Lenders do not want to see any late payments after a short sale
  • Make sure to religiously make minimum monthly payments on time
  • One 30 day late payment will drop credit scores
  • That payment history will be reflected on credit report for seven years
  • To qualify for FHA Loan After Short Sale, there is a three year mandatory waiting period after short sale with re-established credit
  • The three year waiting period time clock starts from the date of the short sale that is reflected on HUD Settlement Statement of the short sale
  • With waiting out the three year waiting period and having re-established credit with a timely payment history, borrowers should qualify for FHA Loan After Short Sale with no problem

Borrowers with a prior short sale and want to get the process of qualifying for FHA Loan After Short Sale prior to waiting period, please contact me at 262-716-8151 or email me at gcho@gustancho.com. We can pull credit report and make sure that there are no errors on credit report as well as to see on ways of maximizing credit scores. We will help borrowers prepare and qualify for a FHA Loan way ahead of time so when they meet the waiting period they will be 100% ready to go.

About The Author Of FHA Loan After Short Sale

Massimo Ressa is the author of this blog on FHA Loan After Short Sale and is a contributing writer for Gustan Cho Associates. Massimo Ressa is the Chief Executive Officer of Loan Cabin Inc., a national direct lender with no overlays on government and conforming loans. Massimo Ressa manages a team of loan officers, sales managers, branch managers, and regional managers nationwide. Over 75% of Gustan Cho Associates borrowers are folks who could not qualify at other lenders due to their overlays.

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