How long must I wait to buy after a Short Sale?
The simple answer - If you want an FHA loan, 3 years. Nothing is simple with the government however. There are factors which could allow exceptions for reducing that 3 year period.
Remember the wait period is longer for Conventional loans.
The Document which applies to his matter was issued by HUD (The Department of Housing and Urban Development) on Dec 16th 2009 – it is Mortgagee Letter 09-52. Here are the most relevant paragraphs:
Borrowers in Default at the time of Short Sale
Borrowers in default on their mortgage at the time of the short sale (or pre-foreclosure sale) are not eligible for a new FHA-insured mortgage for three years from the date of the pre-foreclosure sale.
But here comes the good news:
Exceptions: Lenders may make exceptions to this rule for borrowers in default on their mortgage at the time of the short sale if
•The default was due to circumstances beyond the borrower’s control (such as death of primary wage earner, long term un-insured illness, etc.), and
• The review of the credit report indicates satisfactory credit prior to the circumstances beyond the borrower’s control that caused the default.
The Underwriter is going to require specific information regarding your “extenuating circumstances” – a couple of prescriptions for pain pills will not cut it but a serious illness may well open the door for a new borrowing opportunity.
The bottom line is that if you had a short sale and want to buy again it’s worthwhile trying. Take advantage of the low interest rates and the low prices.
Call or email me today and I will connect you with a lender who understands these rules and has an “in house” underwriter who will discuss your case with your loan originator in detail.