How Long Until I Can Buy a House After Short Sale?
There seems to be a lot of question lately over short sales and about how long it takes for someone who’s been through a Short Sale to qualify for another purchase. In an attempt to clear up any mystery behind the requirements I am including the current guidelines for FHA, Fannie Mae and Freddie Mac:
Definition of a short sale: The sale of a property in lieu of a foreclosure resulting in a payoff of less than the total amount owed to a lender.
FHA will permit borrowers to purchase another home after a short sale, provided all of the following requirements are met.
- – All mortgage payments must have been made within the 12 month period prior to the short sale.
- – The short payoff must serve as payment in full on the existing liens and the existing mortgage servicer may not require repayment of the difference
- between the mortgage balance and the short payoff.
- – Borrowers may not obtain a short sale to take advantage of declining market conditions and purchase, at a reduced price, a similar or superior property within a reasonable commuting distance.
- – Borrowers in default on their mortgages at the time of short sale are ineligible for FHA financing for three years from the date of the short sale unless the default was due to significant extenuating circumstances and the borrower had satisfactory credit prior to the extenuating circumstance.
Fannie Mae and Freddie Mac transactions require a waiting period regardless of the payment history of the mortgage. If any mortgage trade lines reflect they have been settled for less than the full balance, the following wait periods will apply:
- – Two years for transactions with a maximum LTV of 80%
- – Four year for transactions with a maximum LTV of 90%
- – Seven Years for transactions for transactions with an LTV greater than 90%
- – Two years for extenuating circumstance
- – Four years for financial management
Some extenuating circumstance exceptions have been made and most Portfolio Lenders will review each clients credit worthiness on a case by case basis but as a whole these are the industry requirements for short sales.
Please let me know if you have any questions regarding Costa Mesa short sales!! Have a good week.
Broker, GateHouse Properties