This article cover no waiting period on short sale mortgage guidelines. For those who were homeowners during the economic meltdown of 2008 probably have fallen victims of the real estate market crash where their home values have plummeted.
Some homeowners have lost over half the value of their homes in areas of California, Illinois, Florida, Arizona, California, Nevada, and other states. Mortgage lenders were foreclosing on millions of homes nationwide.
Foreclosures hit historical levels and millions of American homeowners could no longer afford to keep their homes. Millions of Americans had no option but to give their homes back to their mortgage lenders.
There are mandatory waiting periods to apply for a new mortgage loan if you had a bankruptcy, foreclosure, deed-in-lieu of foreclosure, or short sale.. If you had a bankruptcy, the waiting period is two years if you want to apply for an FHA purchase loan. The waiting period is three years if you had a foreclosure for you to qualify for an FHA mortgage loan. HUD treats deed-in-lieu of foreclosure and short sales the same as a regular foreclosure. So the waiting period for these will be the mandatory three-year waiting period. In the following paragraphs, we will cover no waiting period on short sale mortgage guidelines.
Recovery After Real Estate Meltdown
The good news is that many Americans have re-established their lives and re-established their credit from the financial nightmare of 2008 and can now afford to own homes. However, Fannie Mae and FHA came up with new mortgage lending guidelines. They established a waiting period for those home buyers who have had a prior foreclosure, deed-in-lieu of foreclosure, or short sale.
Some homeowners offered to surrender their homes for a deed-in-lieu of foreclosure while others offered to sell their homes at a discounted market rate often known as a short sale.
HUD, the parent of FHA, recognizes a deed-in-lieu of foreclosure, short sale, and regular foreclosure the same. The waiting period is 3 years from the date of the sheriff’s sale or the date the homeowners’ name was transferred into the bank’s name after foreclosure, short sale, deed-in-lieu of foreclosure.
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No Waiting Period on Short Sale Mortgage Guidelines
There isn’t a universal mortgage guideline across all lenders regarding waiting periods for obtaining a new mortgage after a short sale. However, many lenders typically impose waiting periods before considering a new mortgage application after a short sale. These waiting periods can vary depending on factors such as the loan type, the short sale circumstances, and the lender’s specific policies. For example, with conventional loans backed by Fannie Mae or Freddie Mac, there are typically two to four years after a short sale before you can qualify for a new mortgage, depending on factors such as the borrower’s financial situation and the down payment amount.
Does VA Have No Waiting Period on Short Sale Mortgage Guidelines
Depending on the circumstances, VA (Veterans Affairs) loans may allow shorter waiting periods after a short sale. It’s essential to consult with lenders directly to understand their specific requirements and any options available to you based on your situation. Additionally, guidelines and regulations may change over time, so checking for the most up-to-date information is a good idea.
Waiting Period Guidelines After Deed-in-Lieu and Short Sale
If you had a deed-in-lieu of foreclosure or a short sale, you will be able to qualify for a conventional loan in four years as long as you can put 5% down payment. However, just waiting out the two-year mandatory waiting period does not guarantee conventional loan approval
You need an automated underwriting system approval by Fannie Mae’s Desktop Underwriter. What the automated underwriting system looks for is for credit and income after the deed-in-lieu of foreclosure or short sale.
If you have aggressively and conscientiously have been working on repairing and re-establishing your credit after your deed-in- lieu of foreclosure or short sale, you should have no problem in getting an automated approval by the Fannie Mae’s Automated Underwriting System.
Conventional Loans Waiting Period After Deed-in-Lieu and Short Sale
For those homeowners who have had a deed-in-lieu of foreclosure or short sale can qualify for a regular conventional loan as long as they can put down a 5% down payment after four-year waiting period from the recorded date of their deed-in-lieu of foreclosure or short sale.
The automated underwriting system will analyze the mortgage loan borrower’s credit scores, payment history, late payments if any, assets, liabilities, debts, and other negative and compensating factors.
Just passing the four-year waiting period does not necessarily guarantee a Fannie Mae automated underwriting system approval. If the borrower did not have any late payments after the deed-in-lieu of foreclosure or short sale and has re-established their credit, the chances are favorable that they will get an automated underwriting system approval.
No Waiting Period on Short Sale To Qualify For FHA Loans
There is no waiting period on short sale for homeowners who had a prior short sale and the payments were current up to the date of the short sale. No waiting period on short sale restrictions for home buyers to apply for a mortgage loan. Mortgage loan applicants also could not have been late on any other payments preceding the finalization of the short sale.
Late payments such as credit card payments, student loans, installment loans, and automobile loans are not allowed to qualify for a mortgage with No paiting period on short sale.
There many homeowners who had a short sale who were current with their mortgage loan. They were told by their lenders to skip the last payment of their mortgage payment in order to finalize the short sale. Unfortunately, even though homeowners were told by the mortgage lender to skip that last payment, that last payment cost a three-year waiting period.
HUD Guidelines on No Waiting Period on Short Sale Mortgage Guidelines
FHA (Federal Housing Administration) loans usually have a waiting period of three years after a short sale. However, there may be exceptions for borrowers who can demonstrate extenuating circumstances. There are folks out there who do not realize this loophole and qualify for a mortgage loan because they were current with their mortgage payments until the finalization of their short sale. Please contact us at Gustan Cho Associates at 800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com with any questions on this matter.
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No Waiting Period Exception on Short Sales
If you had a short sale and your mortgage payments and all monthly debt payments were timely for 12 months prior to your short sale, there is no waiting period to qualify for a new mortgage. In other words, if you kept on making your mortgage payments and your mortgage payments were current until the finalization of your short sale, you can qualify for a mortgage loan. You do not have to abide by any waiting period regulations imposed by Fannie Mae or FHA However, your other monthly debt payments had to be made on time for the 12 months preceding the short sale. Many potential homeowners who had short sales do not realize this loophole.
Update On Conventional Loan After Deed-in-Lieu And Short Sale
Unfortunately, the 2 year waiting period after a short sale or deed-in-lieu of foreclosure with 20% down payment to qualify for a conventional loan is no longer in effect since August of 2014. New Fannie Mae Guidelines to qualify for a conventional loan after short sale and deed-in-lieu of foreclosure is 4 years from the date of a short sale. There is a 4 year waiting period from the recorded date of the deed-in-lieu of foreclosure with 5% down payment.
The waiting period after a regular foreclosure to qualify for a conventional loan is 7 years from the recorded date of the foreclosure. Waiting period on a short sale for FHA loans is 3 years from the date of a short sale.
Waiting period on a short sale, foreclosure, deed-in- lieu of foreclosure for VA loans is 2 years. Waiting period on a short sale, foreclosure, deed-in- lieu of foreclosure for USDA loans is 3 years from the date of the short sale reflected on the HUD to qualify for a USDA loan.
Non-QM Mortgages Has No Waiting Period Requirements After a Short Sale
Non-QM Mortgages has no waiting period requirements after foreclosure, short sale, deed-in-lieu of foreclosure, bankruptcy. However, 10% to 20% down payment is required. There is no private mortgage insurance required on all Non-QM loans. There are no maximum loan limits. For more information on Non-QM loans, please contact us at Gustan Cho Associates at 800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com.
