Mortgage After Short Sale Guidelines For Home Purchase

8

Mortgage After Short Sale Guidelines For Home Purchase

This BLOG On Mortgage After Short Sale Guidelines For Home Purchase Was UPDATED On May 20th, 2018

Previous homeowners who had a prior short sale can now qualify for a mortgage after short sale as long as they have met the mandatory waiting period after short sale.

  • Many homeowners have requested a short sale from their current lender as an option to avoid foreclosure
  • A short sale is when a homeowner gets the blessing of their lender to sell their home below the amount of their mortgage balance
  • Short sales is selling a home that is worth less than the balance of their loan balance
  • Most lenders grant and approve short sales to homeowners who cannot afford their mortgage payments
  • This because it saves time and money of taking the homeowner through the foreclosure process
  • Plus with short sale homes, lenders will get much more money from the sale of their asset than it would for paying for the expenses of the foreclosure process
  • The real estate collapse of 2008 have left millions of homeowners with underwater mortgages where
  • Many homeowners were stuck in homes are worth significantly less than the balance of their home loan
  • Every year, there are approximately 400,000 short sale homes closed
  • Each year, there are tens of thousands of previous short sale homeowners re-entering the housing market as new home buyers
  • Home buyers can qualify to purchase a new home after a short sale
  • However, it depends on several factors

Waiting Period For Mortgage After Short Sale Guidelines

All mortgage programs have different waiting period requirements to qualify for a mortgage after short sale.

  • For FHA and USDA Loans there is a three year mandatory waiting period to qualify for a mortgage after short sale
  • The waiting period clock starts from the date of the short sale that is reflected on the HUD Settlement Statement
  • Homeowners who have been current on mortgage payment for 12 months up to the date of the short sale, there is no waiting period to qualify for mortgage
  • Unfortunately, most lenders will not approve a short sale unless homeowners have skipped that last mortgage payment
  • To this date, I have never ever seen a short sale homeowner who has been timely on their mortgage payment up to the date of the short sale
  • This is not because they did not or could not pay but was instructed by their lender that they needed to miss that last mortgage payment in order for them to do a final approval on the short sale
  • The 12 month on time mortgage payments and all other payments of the short sale homeowner needed to have been current for 12 months up to the date of the short sale in order for the no waiting period after short sale to be effective

Waiting Period After Short Sale On VA Loans

For VA Loans, there is a mandatory period of 2 years to qualify for mortgage after short sale.

  • Like FHA Loans, there is no mandatory waiting period to qualify for mortgage after short sale if the homeowner has been timely on their mortgage payments
  • To qualify for this exemption, veteran borrowers need to have been timely on all other payments for 12 months until the date of the short sale
  • The U.S. Department Of Veteran Affairs (VA) has a two year waiting period after foreclosure, deed in lieu of foreclosure, and Chapter 7 Bankruptcy

Fannie Mae Waiting Period For Mortgage After Short Sale

Fannie Mae has announced new FANNIE MAE implemented and new MORTGAGE AFTER SHORT SALE Guidelines.

  • New Fannie Mae mortgage after short sale guidelines and deed in lieu of foreclosure is 4 years with 5% down payment
  • The old Fannie Mae Guidelines with regards to waiting period to qualify for mortgage after short sale guidelines and/or deed in lieu of foreclosure was 2 years with 20% down payment
  • The mortgage after short sale guidelines and deed in lieu of foreclosure 2 year waiting period program is no longer in effect
  • Fannie Mae waiting period requirements to qualify for a conventional loan after a foreclosure is 7 years from the date of the foreclosure

Government And Conforming Guidelines On Mortgage Included In Bankruptcy

Government and Conforming Guidelines for home buyers to qualify with a prior mortgage included in Chapter 7 Bankruptcy is as follows:

  • For FHA, VA, USDA Loans (Government Loans), if prior homeowners had mortgage included in Chapter 7 bankruptcy, the waiting period start clock begins from the date the housing event has been finalized.
  • Here is an example on waiting period start date on government loans if homeowner had mortgage included in Chapter 7 Bankruptcy:
    • Mortgage included in Chapter 7 Bankruptcy and discharged date was 1/10/2012
    • Mortgage that was included in Chapter 7 Bankruptcy had finalized with foreclosure on 1/10/2018
    • This particular borrowers waiting period started on 1/10/2018
    • Would not qualify for FHA and/or USDA Loan until 1/10/2021 and would not qualify for VA Loan until 1/10/2010
  • For conventional loans, borrowers with mortgage included in chapter 7 bankruptcy, the waiting period is 4 years from the discharge date of Chapter 7 bankruptcy discharged date and the minimum down payment required is 5%
  • The housing event date does not matter
  • Here is an example on waiting period start date on conventional loans if homeowner had mortgage included in Chapter 7 Bankruptcy:
    • Mortgage included in Chapter 7 Bankruptcy and discharged date was 1/10/2014
    • Mortgage that was included in Chapter 7 Bankruptcy had finalized with foreclosure on 1/08/2018
    • This particular borrowers waiting period started on 1/10/2012
    • This borrower would qualify for Conventional Loan as of 1/10/2018 because that would be the four year anniversary date of their Chapter 7 Bankruptcy discharged date
    • The finalized housing event date of the foreclosure does not matter since the mortgage was included in the Chapter 7 Bankruptcy
    • The mortgage cannot be reaffirmed

No Waiting Period After Housing Event

Gustan Cho Associates Mortgage Group has an alternative financing loan program called non-qm loans where there is no waiting period after the following:

  • Short Sale
  • Foreclosure
  • Deed In Lieu Of Foreclosure
  • Bankruptcy discharged date

10% to 20% down payment is required. There is no maximum loan limits. There is no private mortgage insurance required. Contact us at 262-716-8151 for more information or text us for faster response.

Re-Established Credit Required Besides Waiting Period

Besides meeting the mandatory waiting period, both all government loan and Fannie Mae/Freddie require no late payments after a bankruptcy, deed in lieu of foreclosure, short sale, or foreclosure.  Mortgage lenders want to see re-established credit and perfect payment history.

  • Overdrafts in the past 12 months is not allowed
  • Verification of Rent, VOR, is required on all FHA and VA manual underwriting
  • Rental Verification with less than 5% payment shock is considered great compensating factor

Borrowers with prior short sale and need to qualify for a mortgage loan with direct lender with no overlays on government and conventional loans, please contact us at Gustan Cho Associates Mortgage Group at 262-716-8151 or email us at gcho@gustancho.com.

Related> New Fannie Mae Guidelines on Conventional Loans

8 Comments
  1. Jennifer says

    I need a loan to do 1031 exchange on investment property. Loan around 650 with 20 percent down. Short sale dec 2013

    1. Gustan Cho says

      There is a four year waiting period after a short sale and/or deed in lieu of foreclosure to qualify for any conventional loan. There may be alternative financing that I may help you with such as private money loans or hard money loans. Please contact me at 262-716-8151 to discuss other alternative financing.

      Gustan Cho
      https://www.gustancho.com

    2. Mrs Barbara Johnson says

      DO YOU NEED A LOAN?

      Are you a business man or woman? Are you in a financial mess or do You need funds to start your own business? Need to pay loans Their Debt or pay off your bills or start a nice business? Do you have a low credit score and you will find it hard to get Capital loan from local banks / other financial institutions? You need one Loan or funding for any reason such as

      a) Personal Loan, Business Expansion,
      b) Business Start-up, Education,
      c) Debt Consolidation,
      d) Hard Money Loans

      We offer loan at low interest rate of 2% and with collateral and not Collateral, we offer personal loans, debt consolidation loans, venture capital Capital, business loan, education loan, mortgage or Loans for any reason”.

      However, our method offers the possibility to specify the amount of the loan needed and also the duration you can afford it, gives you a real Chance get the funds you need!

      Mrs Barbara Johnson

  2. birry says

    get your urgent Affordable loan that will change your life for ever,I am MR birry a certified loan lender,I offer loan to individual and public sector that are in need of financial Assistance in a low interest rate of 2%. Bad credit acceptable,The Terms and Conditions are very simple and considerate.You will never regret anything in this loan transaction because i will make you smile. Our company has recorded a lot of breakthroughs in the provision of first class financial services to our clients,especially in the area of Loan syndication and capital provision for individuals and companies. We have brought ailing industries back to life and we back good business ideas by providing funds for their up start. We have a network of Investors that are willing to provide funds of whatever amount to individuals and organizations to start business and operations.i want you to understand the fact that i MR birry is out to help the less financial privilege get back on track by providing all type of loans to them (E.G) mortgages, home loans business loans and bad credit loans commercial loans, start-up working capital loans, construction loans car loans, hotel loans,and student loans, personal loans, Debts Consolidation Loans, what are you waiting for asap why don’t you try. MR birry Loan home and be free from debts any interested client should contact me asap

  3. Mrs Barbara Johnson says

    DO YOU NEED A LOAN?

    Are you a business man or woman? Are you in a financial mess or do You need funds to start your own business? Need to pay loans Their Debt or pay off your bills or start a nice business? Do you have a low credit score and you will find it hard to get Capital loan from local banks / other financial institutions? You need one Loan or funding for any reason such
    a) Personal Loan, Business Expansion,
    b) Business Start-up, Education,
    c) Debt Consolidation,
    d) Hard Money Loans

    We offer loan at low interest rate of 2% and with collateral and not Collateral, we offer personal loans, debt consolidation loans, venture capital Capital, business loan, education loan, mortgage or Loans for any reason”.

    However, our method offers the possibility to specify the amount of the loan needed and also the duration you can afford it, gives you a real Chance get the funds you need!

  4. Dean says

    I missed three payments on my mortgage and had a shortsale in 2010. I want to buy a house again, and am qualified for 15 yr FHA with 22% down. Just found out that MIP is now mandatory on all FHA.
    Can I still qualify for conventional loan, possibly 15 yr 20% down?
    What would my DTI have to be?

    1. Gustan Cho says

      If you had a short sale in 2015, you can qualify for both a FHA Loan with 3.5% down payment as well as a conventional loan with 5% down payment. It is up to you whether you choose the 15 year fixed rate mortgage or 30 year fixed rate mortgage on either FHA Loan or conventional loan. 15 year mortgage rates have lower mortgage interest rates than 30 year fixed rate mortgage loan programs on both FHA Loans and Conventional Loans. Debt To Income Ratio requirements on FHA Loans are 56.9% DTI if your credit scores are 620 FICO or higher and 43% if your credit scores are under 620 FICO. Minimum credit scores to qualify for FHA Loans are 580 FICO for a 3.5% down payment FHA insured mortgage loan. You can qualify for FHA Loans with under 580 FICO credit scores but you would need 10% down payment. All FHA Loans require FHA mortgage insurance premiums. 30 Year FHA Loans FHA Mortgage Insurance Premium is set at 0.85% annual FHA Mortgage Insurance Premium and with 15 Year FHA Loans the FHA Annual Mortgage Insurance Premium is 0.45%. All FHA Loans require upfront FHA Mortgage Insurance Premium of 1.75%, a one time fee which can be added on the balance of the FHA Loan. Mandatory waiting period to qualify for FHA Loan after a short sale is 3 year waiting period and mandatory waiting period to qualify for a Conventional Loan after a short sale is four years from the date of short sale. Conventional Loans with less than 20% down payment require private mortgage insurance which is paid by the borrower. Conventional Loan Borrowers do not have to pay private mortgage insurance with less than 20% down payment if they choose Lender Paid Mortgage Insurance, also called LPMI, which is available to conventional loan borrowers in lieu of a slightly higher conventional mortgage interest rate. From what you stated, you should be set to go. Please call me at 262-716-8151 or email me at GLCProperties@aol.com if you have any additional questions. Hope this response answers all of your questions.

      Gustan Cho NMLS 873293
      Sales Manager
      The Money Store
      262-716-8151
      GLCProperties@aol.com
      http://www.gustancho.com

  5. Vince Liguori says

    DO YOU NEED A LOAN?

    Are you a business man or woman? Are you in a financial mess or do You need funds to start your own business? Need to pay loans Their Debt or pay off your bills or start a nice business? Do you have a low credit score and you will find it hard to get Capital loan from local banks / other financial institutions? You need one Loan or funding for any reason such as:Email: eloanpro1@gmail.com

    a) Personal Loan, Business Expansion,
    b) Business Start-up, Education,
    c) Debt Consolidation,
    d) Hard Money Loans

    We offer loan at low interest rate of 2% and with collateral and not Collateral, we offer personal loans, debt consolidation loans, venture capital Capital, business loan, education loan, mortgage or Loans for any reason”.

    However, our method offers the possibility to specify the amount of the loan needed and also the duration you can afford it, gives you a real Chance get the funds you need!

    Contact us via E-mail: eloanpro1@gmail.com

    Vince Liguori
    Chief Executive Officer
    Chief Operating Officer
    Hard Money Capital Group
    http://www.hardmoneycapitalgroup.com
    847-561-0217

Leave A Reply

Your email address will not be published.

Call Now ButtonCALL NOW