Home Buying in Chicago>Question Details

Jragan03, Home Buyer in Lockport, IL

When can I qualify for a mortgage? I sold a condo as a short sale, was never late, short sale due to getting married and having baby in 1 bed condo.

Asked by Jragan03, Lockport, IL Tue Sep 13, 2011

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Jragan,

The guidelines are VERY CLEAR on this one.

To qualify for an FHA LOAN after a Short Sale: You must either wait 3 YEARS from the date sale closed and transferred to new owner. There is (theoretically) no waiting period if the borrower had no late payments on ANY mortgage or consumer debt within the 12 month period preceding the short sale AND they are not taking advantage of declining market conditions. This will probably be your best chance, but you'll need to be manually underwritten, and many lenders prefer to rely on Automated Underwriting Findings.

For CONVENTIONAL LOANS, it’s more complex:
7 years from date sale closed and transferred to new owner or transferred back to bank for new loans with less than 10% down payment.
4 years from date sale closed and transferred to new owner or transferred back to bank for new loans with 10% down payment.
2 years from date sale closed and transferred to new owner or transferred back to bank for new loans with 20% down payment.
2 years from date sale closed and transferred to new owner or transferred back to bank for new loans with 10% down payment and acceptable extenuating circumstances.

As far as acceptable extenuating circumstances are concerned, they need to be documentable and verifiable nonrecurring events that are beyond the borrower’s control and cause a sudden, drastic and prolonged reduction in income. Death of a wage earner and catastrophic illnesses would count, having a baby and getting married would not count, because these are not unforeseen circumstances.

Let me know if you want to take a shot at that FHA option.


Matt Bukovy
Senior Mortgage Consultant
Wintrust Mortgage
NMLS# 755921
mbukovy@wintrustmortgage.com
773-416-7107
Web Reference: http://www.mattbukovy.com
2 votes Thank Flag Link Tue Sep 13, 2011
Hi there, Jragan03.

The reasons behind your choice to short sale your property don't affect your credit rating, unfortunately. Best bet for you is to speak with an expert lender to find out when exactly you may qualify again for financing.

Give us a call at 312.242.1000 if you do not have a lender and we will put you in touch with an expert.
Thank you!
Web Reference: http://www.dreamtown.com
0 votes Thank Flag Link Wed Sep 14, 2011
2 years generally.. speak with your agents best lender..that is a tough loan to resell.
Web Reference: http://www.joeschiller.net
0 votes Thank Flag Link Wed Sep 14, 2011
Its tough to no with such little information. I would speak with a qualified lender and see what your options are. We cant tell you without all the details.
Web Reference: http://AmericorpRe.com
0 votes Thank Flag Link Tue Sep 13, 2011
Most lenders say there is a 2-year waiting period. However, my advice to people is work hard on getting your credit score above 700 or more. Work with credit correction people, get new trade lines, don't over due the credit cards, etc.

Banks like people who have repaired credit and sometimes can shorten your sentence. Also, build up a cash reserve. Downpayment speaks volumes to lenders. It is all about risk and past performance and current worth determine risk.

If you need a recommendation on a credit correction person, just give me a call at 888-788-9544. I would be happy to give you a few good recommendations.
0 votes Thank Flag Link Tue Sep 13, 2011
Hi Jragan03,

Reach out to Larry Bettag at Cherry Creek Mortgage as he has written about this subject and has closed on properties for people who were never late on payments but had reasons why they had to do a short sale. He can be reached at 630-417-7172. Guidelines can vary from what Larry talks about. What I am reading from lenders who are closing months after someone has gone through a short sale but not late on their payments says it can be done but it is the situation, etc. Larry can explain ... I just sell.

Barb Van Stensel
Keller Williams Lincoln Square
2156 W. Montrose
Chicago, IL 60618
0 votes Thank Flag Link Tue Sep 13, 2011
There are a number of very qualified lender reps here on Trulia. There are a number of factors that will determine when you can buy.

Some of their questions will be-

How long ago did the sale take place?
Did you have the deficiency waived or are you paying it now?
Do you know what your current credit score is, after the impact of the short dale?
Did you get a release?
Were both you and your spouse on the loan?
Do you know your spouse's credit score?
Have you checked to see if the price point of property you are looking at is something you or your spouse can qualify for on your own?

This is just for starters, there are certainly other questions of relevance and the answers will all determine what your time frame for a purchase looks like.

Every situation is different, but you need a pro to sort it out.
0 votes Thank Flag Link Tue Sep 13, 2011
Do you still owe the balance of the shortage?
Was your spouse also an owner of the condo that sold short?
Was there more than 1 mortgage on the condo, and if so did the second lender sign off on the shortage?
Does your spouse have any credit problems?
These things will all have an effect on a new mortgage.
0 votes Thank Flag Link Tue Sep 13, 2011
There does not seem to be a consistant answer to this question. You need to speak with a number of lenders, give them your specifics and see what they say. Try to avoid the big banks as they tend to be rather rigid. Look at the smaller banks. My web site has a few lender references. There is no charge to ask questions.
0 votes Thank Flag Link Tue Sep 13, 2011
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