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Due to recent struggles in the financial and housing sectors, many homeowners have found themselves falling behind on their mortgages and facing the threat of foreclosure. For some homeowners, short sales have provided a viable option to going through the stressful and drawn-out process of foreclosure. If you're planning on qualifying for a loan to buy home in the future, be sure that you understand what you'll need to do to meet new Federal Housing Administration (FHA) and lender requirements. Of course, you should always talk to a qualified mortgage banker before making any major buying or selling decisions. Short Sale, Foreclosure and Your Loan Options Going through a short sale or foreclosure can be extremely stressful for homeowners who hope to buy again in the future. Whether you've already been through a foreclosure or are deciding if you should pursue a short sale, it's essential that you understand how your future buying power is affected by these actions. Remember that your overall credit rating will also impact your ability to qualify for a loan, so maintaining a good credit history after a foreclosure or short sale is essential. Qualifying for a Loan after a Short Sale During a short sale, a homeowner works with a mortgage banker to sell a home when a mortgage has become too burdensome. In general, short sales are seen as preferable to foreclosures because they have a lesser effect on credit reports and allow individuals to begin qualifying for loans again relatively quickly. Most homeowners who complete a short sale will need to wait at least two years before applying for financing again. According to current guidelines, buyers can qualify for a conventional loan after a short sale so long as they meet the following wait period and down payment guidelines: - Two years with a 20 percent down payment.
- Four years with a 10 percent down payment.
- Seven years with less than 10 percent down.
Requirements are slightly different for individuals who plan to take out FHA or Veterans Affairs (VA) loans. For FHA loans, buyers must wait three years from the closing date of their short sale before qualifying but can expect to pay less than 10 percent down. For VA loans, buyers must wait two years and are not expected to make a down payment. New legislation regarding foreclosure due to uncontrollable economic events is set to make FHA loans available to homeowners in as little as one year after short sale or foreclosure. Be sure to talk to your mortgage banker to learn more about these developments. Qualifying for a Loan after Foreclosure A foreclosure will have long-lasting effects on your credit record. Thankfully, the federal government is working diligently to make it easier for individuals who have gone through foreclosure and repaired their credit to qualify for loans. According to new regulations, you may be able to qualify for a loan in as little as a year after your foreclosure. For many borrowers, however, older guidelines about securing a loan after foreclosure will apply. In general, you must wait at least four years after foreclosure before you can qualify for another home loan. Maintaining an excellent credit record and saving for a larger-than-average down payment can help you qualify for a loan in a shorter amount of time. Working with a Mortgage Banker to Understand Your Options Qualifying for a loan after a short sale or foreclosure may seem impossible. However, options are available. A professional mortgage banker will be up to speed on the current regulations and nuances of qualifying for a loan after a short sale or foreclosure.
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mortgage banker, home loan, condo loan, Lake Tahoe, Truckee, Incline Village, short sale, foreclosure, qualifying, qualifying for a foreclosure,
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