This guide covers approved mortgage after short sale in Chicago FAQ and answers. Ronda Butts covers getting approved for a mortgage after short sales in Chicago. Interview with Jeff Wolff, President of Illinois Distressed Property Solutions. Jeff has been in the business for over 15 years. He negotiated hundreds of short sales with multiple lenders. He knows about qualifying for a mortgage after short sales in Chicago. Here he provides his expertise on the most commonly asked questions regarding mortgage after short sales in Chicago.
How To Get Approved For a Mortgage After Short Sales in Chicago
Here is a question and answer session between Jeff Wolff and Chicago real estate agent Dino Hasapis about FAQ and answers on mortgage after short sales in Chicago: QUESTION: Why should I do a short sale vs. a foreclosure? A short sale is the best option for your credit. Though it will impact consumer credit if payments are missed until closing.
Credit will start repairing itself once the short sale is complete. A deed-in-lieu (DIL) is a secondary option usually offered by the lender if the short sale process does not attract a buyer for the property.
A foreclosure on record is most damaging in many ways: It puts a judgment against the borrower(s) for the deficiency balance that the lender can come back after the buyer for up to 10 years. If a second lien holder is part of the short sale, they almost always sue the borrower(s) for their deficiency balance, causing the borrowers to take other actions such as bankruptcy.
Non-QM Loan Options For a Mortgage After Short Sales in Chicago
Getting approved for a mortgage after short sales in Chicago can be challenging. However, it is possible with the right steps and strategies. Here are some key points to consider: Most lenders have a mandatory waiting period after a short sale before they will consider you for a new mortgage. This waiting period can range from 2-4 years, depending on the lender’s guidelines and the type of loan you seek. Short sales credit score is a crucial factor in mortgage approvals. During the waiting period, focus on rebuilding your credit score by making all timely payments and keeping your credit utilization low.
Borrowers can qualify for non-QM loans one day out of short sale, foreclosure, and bankruptcy with no waiting period requirements. Lenders may require a larger down payment on non-QM loans.
Non-QM loans one day out of short sale, foreclosure, or bankruptcy often require 20% or more. Larger down payment is required to offset the perceived risk associated with the short sale on your credit history. A larger down payment can increase your chances of approval. Be prepared to provide a detailed letter of explanation regarding the circumstances that led to the short sale. Lenders will want to understand the reasons behind the short sale and ensure that the situation is isolated. Get qualify for Non-Qm loan in Chicago
Income and Employment Stability
Lenders will scrutinize your current income and employment situation. Stable employment, consistent income, and verifiable assets will be essential in demonstrating your ability to repay the new mortgage.
Consider Alternative Lenders
If you need help getting approved by traditional lenders, consider exploring alternative options such as portfolio or non-qualified mortgage lenders. These lenders may have more flexible guidelines and be more willing to work with borrowers who have had a short sale.
Work with an Experienced Mortgage Loan Professional
Engaging the services of an experienced mortgage broker or loan officer familiar with short-sale situations can be beneficial. They can guide you through the process, identify lenders with appropriate programs, and help you present your application in the best possible light. Being patient and realistic about your mortgage prospects after a short sale is important. The longer you demonstrate a clean credit history and stable financial situation, the better your chances of getting approved for a mortgage in Chicago. Additionally, being upfront and thoroughly explaining the short sale circumstances can help lenders understand your situation and approve your loan application.
Seller Concession With Short Sale
QUESTION: My bank offered cash for keys. Can I get a larger seller concession if I do a short sale? This all depends on the investor who owns your loan. Typical relocation incentives from Fannie Mae and Freddie Mac are $3000. FHA loans start at $3000 but are often reduced to meet the net of a short sale. If the investor is someone other than those three, a current program, if qualified, is the HAFA Short Sale program with relocation incentives up to $10,000.
Approval By Lenders on Short Sale
QUESTION: How long does approval usually take? Typical short sales take about 90-120 days. FHA loans typically take more than 6 months due to strict guidelines.
Approved Mortgage After Short Sales in Chicago Process
QUESTION: What is the process and what is important to know about the process? We always pre-qualify a seller as to whether they will qualify. Get approvable for FHA loan after short sales in Chicago
Short Sale Prior To Sheriff’s Auction
QUESTION: My auction date is less than a month away. Can I still do a short sale? In most cases, yes. But you have to act quickly and provide the required paperwork to the lender. The property needs to be listed and your short sale team in place with third-party authorization. QUESTION: If I get the paperwork in by the required date, will it stop the auction? This all differs by the lender and the investor who owns your loan. It also depends on the county your property is in. It’s best to make the decision to do a short sale before an auction is set. If this isn’t possible, your best chance of success is greater than 25 days before the auction.
Finding New Home After Exiting Short Sale Home
QUESTION: My short sale got approved. What if I can’t find a new home by the approval deadline? Once a short sale starts, I advise the sellers they need to have an idea where they may move next. There should be a minimum of 90 days from the time the property is listed before a closing. A future landlord should understand you have suffered and your credit score is going to be lower but you took the initiative to short sale and start anew and landlords are fairly reasonable if you explain properly. There have been millions of homeowners who have had to short sale in this country and had to find a rental with lower credit.
Repairs and Window Dressing Home Prior To Listing
QUESTION: I can’t afford lawn care or repairs. What can I do? The short sale team with work with the lender’s property preservation group to cut the grass, or winterize the home in the winter if vacant. They will not do any repairs, though. They will ensure the lawn is maintained and the house secure if it is not occupied.
Challenges With Short Sales and Mortgage After Short Sales in Chicago
QUESTION: What are the biggest challenges with short sales?
- Getting full cooperation from the sellers
- Getting a fair bank appraisal/BPO
- Getting an offer in a weak market
Real Estate Investors Buying Short Sale Homes
QUESTION: I am an investor, how low will a lender go on a property? I get asked this all the time: “What do you think the lender will accept?” An upfront analysis is done before all short sales are listed. We can determine a range of what the fair market value is as perceived by the lender. The lenders will generally accept as low as 88% of FMV determined by their appraisal. Lenders do not put any emphasis on a cash deal in most cases. They want the highest amount for the investor. QUESTION: Can I apply for a loan modification at the same time as putting my property on the market for a short sale? No. If home retention is the goal, a loan modification should be completed before a short sale. If you are denied a loan mod, you will automatically qualify for a short sale, which is when you will then list the property.
Costs and Fees to Homeowners to do Short Sale
QUESTION: What does it cost me to do a short sale? There are usually no costs to the borrowers for a short sale if qualified. All fees such as commission, attorney, tax, and title charges are credited by the lender from the accepted purchase price of the buyer for that property. If a seller has more than $5000 in liquid assets (bank accounts) the investor may request a 20% cash contribution of that amount. QUESTION: I know the property is worth more than the bank is accepting. Why are they accepting that amount? The amount the lender accepts on any short sale is based on their current BPO or Appraisal and typically will accept 95% of that value. It’s all based on the value the lender receives from their appraisals.
Deficiency Balances After Short Sale
QUESTION: What happens with the deficiency balance if I complete a short sale? If the property is a primary residence, you will qualify through 2016 for the 2007 Mortgage forgiveness act. A 1099-c will be issued. That amount goes on the IRS 982 form and zeroes out any tax liability. Congress should extend for another 2 years. They typically do it in December of the calendar year. If the property is an investment, the sale will most likely result in a capital loss to offset the deficiency balance. Please seek a Certified Public Accountant for your situation.
How To Get Approved For Mortgage After Short Sales In Chicago
Dino Hasapis is an associate contributing author of this ARTICLE getting approved for a mortgage after short sales Ii Chicago and our guest writer at Gustan Cho Associates. Dino Hasapis is also a prominent real estate agent in Chicago and the Chicagoland Area. Dino works for Compass Real Estate in Chicago, Illinois.
