With Short Sales becoming so common in our current real estate market, CLA Realty has come across the following question MANY from home owners considering a short sale: How soon after a short sale can a seller buy a new home?
Good news for home sellers that have been through a short sale: FHA permits loans to borrowers whose credit history indicates a short sale! Obviously, a home owner can’t simply short sale their home so they can buy a similar home for cheaper because prices have declined. There are of course some requirements in order for a former home owner who sold through a short sale to obtain a FHA loan.
Borrowers whose credit history indicates a short sale are able to obtain an FHA loan provided the following conditions are met:
• The borrower must have made all mortgage payments on time for the last 12 months prior to the short sale.
• Borrowers who executed a short sale after completing a permanent modification are eligible for FHA financing, provided the borrower made at least 12 payments on the permanent modification and all payments on the permanent modification were made within the month due for the 12 months prior to the short sale.
• Borrowers who completed a short sale on a loan that was under a temporary modification plan at the time of the short sale are ineligible for FHA financing for 3 years after the short sale.
• The borrower must have made all installment debt payments within the month due for the 12 months prior to the short sale.
• The short sale 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 execute 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 a short sale are ineligible for FHA financing for 3 years after the date of the short sale.
• Borrower(s) may not have had a previous bankruptcy or foreclosure.
If you are current on your mortgage and did not miss any payments during the time of your short sale, you may be eligible to purchase another property immediately after using an FHA loan if you meet all these requirements set forth by HUD. Talk to a Realtor here at CLA Realty and we will set you up with a trusted lender about your options. Please email us at info@clarealty.com or call us toll free at 1-888-483-0823.
