Financing in Attleboro>Question Details

Chrysti017, Both Buyer and Seller in Attleboro, MA

We're "underwater" in our mortgage. Tried to sell, offers 30k less than we owe. If we shortsale, possible to buy right away? Credit

Asked by Chrysti017, Attleboro, MA Tue Jun 7, 2011

great: 800s Since buying in 06, we are down an income, and now have two young children. We can't refinance, and don't qualify for "making home affordable" modifications. Wasn't sure if anyone knew of a program that may allow us to purchase another home as we shortsale our current one. I know it impacts our credit, but our credit is high, so maybe we'd still qualify? Hoping for some good news...been spinning our wheels with this for a couple years now.

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10
Greater Boston Short Sales’ answer
As someone who exclusively negotiates Massachusetts short sales, I think I can provide some insight on this issue. According to Fair Isaac Co., the creator of the FICO score, "the higher the consumer's credit score, the greater it will fall as the result of a short sale, foreclosure or bankruptcy." According to a recent FICO study, a consumer with a credit score of 780 will have a score in the range of 655-675 following a short sale. Conversely, a consumer with a credit score of 680 will have a score in the range of 610-630 following a short sale. While it is true that you can minimize the immediate effect to your score by remaining current on your payments, the long term effect generally depends upon how your lender reports the short sale to the credit bureaus. If you can get them to report the event as "settled" or "settled for less than total amount owed", you may avoid having a "short sale" reported on your credit report. With regard to being able to obtain financing, most programs require a minimum of two years following a short sale, versus five following a foreclosure. If you are considering a short sale, make sure that you engage a professional negotiator to ensure that the lien is fully discharged and the bank forgives any future obligations under the terms of the note and waives all rights to pursue a deficiency judgment. You should also consult with a tax professional to confirm that the forgiven debt is not treated as income by the IRS.

Andrew
Greater Boston Short Sales, LLC
http://www.closingtableblog.com
http://www.gbshortsales.com
1 vote Thank Flag Link Wed Jun 15, 2011
Future Fannie Mae Loan - A homeowner who successfully negotiates and doses a short sale will be eligible for a Fannie Mae backed mortgage after only 2 years.

FHA Loan late - 3 years from the date the FHA insurance claim is paid to the lender - not the date of the short sale closing

FHA loan current - NO WAIT - borrower must be current on all obligations, including istallment debt

VA Loan LATE and VA loan CURRENT - 3 years

Conventional loan late - 2 years

Conventional loan current - No wait - borrower must be current on all obligations including installment debt

CREDIT SCORE - only late payments on mortgage will show and after sale, mortgage is normallyu reported as "paid as agreed or paid as negotiated - This can lower the score 50 points if all other payments are being made"


SOUR E: http://www.cdpe.com

Good luck!!
0 votes Thank Flag Link Sun Jun 26, 2011
36 months before you can buy! If your property is held by Fannie Mae you may be eligible for the 125% refinance option!
0 votes Thank Flag Link Fri Jun 17, 2011
Seller and Buyer:

If you short sale you will be liquidating your assets and lowering your credit score. The general rule is that you can not qualify for an FHA loan for 3-5 years after doing a short sale, and the only people that I see buying after selling short are those that get gifted money from family to start over. If you can borrow money from family to avoid having to short with the bank and protecting your credit you then would be eligible to buy with FHA which would allow for low down payment. If this is not an option, I would either stay put or plan on renting after your sell. Best
0 votes Thank Flag Link Thu Jun 16, 2011
I'm sorry to hear you are in a situation that so many are in. First, do you not have the money/assets to pay the difference between the loan and the offers? Have you been approved for a short sale? A short sale is normally only approved when someone doesn't have the assets to bring money to the closing if the sale is less than the loan. Many people today are selling for less than the loan on the property, but not all are short sales.

If you apply and are approved for a short sale because you don't have assets to cover the difference, the other posters are correct, your credit will take a hit. There is no way to figure out exactly what it will be, but as others have mentioned, there is normally a 2 year time frame from when you sell to when you are able to purchase again.

Good luck whatever you decide.
0 votes Thank Flag Link Wed Jun 8, 2011
Sellers often lose about 200 points (it varies) and are not allowed to buy for another 2 years.
0 votes Thank Flag Link Wed Jun 8, 2011
Some programs do allow you to purchase again right away provided that you were current with your mortgage at the time of the short sale and some other conditions. What you need to remember is that you're essentially telling a lender that you are leaving one property and paying less than you agreed to finance a different property - just consider how risky they may perceive this. Some rent out their homes and move into a rental unit themselves, some short sale then rent and others, as you suggest, short sale then buy, but your best best would be to seek a mortgage loan pre-approval to make certain that you meet program guidelines. Your present lender would need to OK the short sale so it may take some time before you're ready to sell your current home.
0 votes Thank Flag Link Wed Jun 8, 2011
If you can afford the house, just keep it. You'll get to keep your great credit and in 25 years it will be paid off. Good Luck
0 votes Thank Flag Link Wed Jun 8, 2011
If we had been able to stay in the home, we would have. There were other circumstances that were forcing us to sell.
Flag Thu Mar 7, 2013
Christi,

You're unfortunately stuck in the position of many Americans and I see it everyday. It is still possible for you to short sale your property and keep your credit in good standing, but it will get hit a bit. The reason is because the mortgage will be considered "settled" and not paid satisfactorily. An option it to owner finance a home and get the seller to do a short term balloon for say 3 years with no prepayment penalty. So after your credit recovers a bit you can then refinance and obtain the mortgage yourself through a bank.

I hope that helps.
0 votes Thank Flag Link Tue Jun 7, 2011
Under some circumstances you can buy right away. It depends on 'extenuating circumstances'. I am working with my mortgage partner at the moment to find out how the underwriters define 'extenuating circumstances.' With your credit score, if you can manage the payments until the home sells you may be able to buy again right away. If you will contact me here on Trulia I will do my best to provide you with the definition and circumstances once I learn what, exactly, they are.
0 votes Thank Flag Link Tue Jun 7, 2011
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