Qualifying For Mortgage After Short Sale
Qualifying For Mortgage After Short Sale requires mandatory waiting period after short sale. A short sale is when a mortgage lender will approve a homeowner who has a mortgage higher than the value of their home sell their home and forgive the negative deficit of their mortgage loan. Short sales were extremely popular after the 2008 Real Estate and Mortgage Collapse where home values has plummeted throughout the country. Millions of homeowners were stuck in homes where they could not sell because the balance of their mortgage loan was higher than the value of their homes. Mortgage lenders were offering short sales to homeowners with underwater mortgages because they can close their books much sooner and avoid the lenghthy and costly process of foreclosure.
How Does a Short Sale Work?
If you are a homeowner who are stuck in a home with a mortgage balance that is higher than the value of your home, you may consider a short sale instead of foreclosure. You first need to ask your mortgage lender of your home loan whether they will entertain a short sale. Most mortgage lenders will authorize a short sale instead of going throught the process of foreclosure which can take a very long time, cost thousands of dollars in legal fees, and take up hundreds of hours of work from the lender. Once the mortgage lender gives you their blessings, you then contact a realtor and have the realtor do a market analysis of your home. You get to choose your realtor of choice. Everything you do during the short sale process, you need the approval of your mortgage lender. Your mortgage lender will review all the real estate purchase offer you get from potential home buyers of your home and need to approve it and sign off on it. After you list your home and get a solid purchase offer on your home, you need to submit the purchase offer to your mortgage lender for them to sign off on it. Short sales take substantially longer for a home buyer to close. Most home closings are closed in 30 to 35 days. A short sale home buyer may need to wait 90 days or more to close on their home purchase because mortgage lenders take their sweet time.
Waiting Period Requirement In Qualifying For Mortgage After Short Sale
There are mandatory waiting period after short sale to qualify for a mortgage loan. Qualifying For Mortgage after short sale for FHA Loans, the mortgage loan borrower needs to wait three years after the short sale date of their home. For conventional loans for mortgage after short sale, there is a four year waiting period to qualify. There is an exemption where there is no waiting period after short sale if you have not been late with any mortgage loan payment until the date of your final short sale date. Unfortunately, many folks do not meet this exemption because their mortgage lender will require that they skip a mortgage payment for their short sale to be effective. There are times where a mortgage lender will let the homeowner to be timely with their mortgage loan payment until the date of the short sale. If this is the case, there is no waiting period after a short sale to qualify for either a FHA Loan, Conventional Loan, VA Loan, or USDA Loan.