If you have an FHA loan and you rent it out for 18 months or more and later you decide to try to short sale.... You will be denied! No ifs ands or buts!
You said you are underwater... You can short sale and buy another home immediately... with restrictions. One of the requirements is a distance factor another is you have to be current on your mortgage...
Search Short Sales and foreclosure Deals at www.BuyNjShortSales.com
If you are thinking about just the basic FHA mortgage, the answer is "no."
Under current guidelines, FHA lenders will approve a maximum base mortgage loan equal to 96.5% of the purchase price. They will use 96.5% of the "appraisal value" if that value is lower than the purchase price.
This makes sense for 2 reasons: (1) the lender does not want to be on the hook (right out of the starting gate) for a loan that is more than the property is worth; and (2) "YOU" do not want to pay $275,000 for a property worth $225,000. Then YOU would be in a losing position (upside down) right out of the gate.
The pre-approval amount is not related at all to the actual purchase price or appraised value of the actual home you end up selecting. The pre-approval was merely a guide so you and your realtor would know where to focus your search efforts. No need to look at penthouses if your approval is for a townhouse. :-)
Hope things went well.
Carol Lloyd, CLU, ChFC, FLMI
"In the Business of Educating My Clients About Mortgages"
First Hallmark Mortgage
(856) 728-7100... more