Wanting to buy again. Had short sale two years ago. Credit score in 700's again. Could we qualify for FHA loan for under 500k in King county,?

Asked by Mominwa, Bellevue, WA Tue Aug 2, 2011

Hi. We had to Short Sale our on house over 2 years ago due to job relocation and special needs child expenses. We had to stop paying...only way bank would take us seriously.Fast forward two years later. Debts paid off, scores in 700's again.Only debt auto loans and student loan. Income has doubled in last two years ( high 200k range). Could we Qualify for a FHA loan with 3% down? Looking to buy a house in East King County for under 500k again. Wanting to start looking in Jan.Is this possible or do we need to wait another year and save atleast 10-20% down?. Thank you..

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20
, ,
Thu May 22, 2014
You don't have to wait.....

We have a portfolio "2nd Chance" loan that allows you to buy again just one day after Short-Sale or Foreclosure. You can only have one on your credit and you will need a 20% down-payment and 660 mid FICO score. Late payments acceptable.

This loan is available in - AZ, CA, CO, DC, FL, HI, IL, MD, MT, NV, NJ, NY, NC, OR, SC, VA, and WA . Loan amounts up to $4 million +

MORE INFO - http://cbosse.banchomeloans.com/2014/02/20/how-to-get-a-jumb…
0 votes
aftervince19…, , Greenville, NC
Fri Apr 18, 2014
See Comstock if you have a buyer in need. They have a flexible credit loan. This program assists homeowners who have recently been through a foreclosure, short sale or have recently emerged from bankruptcy.
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aftervince19…, , Greenville, NC
Fri Apr 18, 2014
See Comstock if you have a buyer in need. They have a flexible credit loan. This program assists homeowners who have recently been through a foreclosure, short sale or have recently emerged from bankruptcy.
0 votes
lendersnetwo…, Agent, Plano, TX
Sun Sep 1, 2013
Yes you do qualify now for a new program for FHA by HUD.

The U.S. Department of Housing and Urban Development (HUD) recently announced the “Back to Work – Extenuating Circumstances” program, aimed to help people who have lost their home through foreclosure, short sale or bankruptcy. HUD has reduced the previously required minimum of 36 months to 12 months before they may be able to finance another home, given that they meet HUD’s minimum eligibility requirements.
0 votes
Joycelewis412, Home Buyer, Sacramento, CA
Sat Aug 10, 2013
Know if you can qualify for a mortgage after short sale, foreclosure, or filing bankruptcy. Check out http://www.whywaitbuytoday.com for details.
0 votes
Janice roth, Agent, Bellevue, WA
Thu Sep 13, 2012
FHA is now 3.5% down. You may get an exception that will alow you to purchase i two years due to your circumstances. Usually you need to wait for 3 years. gary Roth 206 714-8107
0 votes
Richard, , Bellevue, WA
Wed Aug 3, 2011
Your situation is understandable in the eyes of lender and you are back to 700 score! What you want to check is the max loan FHA will lend in King County. 500K with 3.5% down will still put you in the jumbo conventional loan category. Also, you need to save more than 3.5% as there is mortgage insurance for FHA and other costs, unless you can convince seller to pay for you, still there is cap. Please write me directly to discuss further, if you like more help.
0 votes
Robin Krieger, Agent, Overland Park, KS
Wed Aug 3, 2011
In Kansas City you need 3 years from the date it closed....but of course you also have to have decent credit, too. So...rent for a year; prices are still dropping anyway.....
0 votes
Lan Nguyen, Agent, Bellevue, WA
Wed Aug 3, 2011
Hi Mominwa,
My client closed on her new home a few months back, her situation is similar to yours. You need to be working with a good mortgage lender, and agent that know how to close these kind of transaction. Please feel free to contact me for a private consultation.
0 votes
Karen Mcknig…, Agent, Kirkland, WA
Wed Aug 3, 2011
Hi mominwa,

I have a PDF I can send you, if you want, and it gives an overview of Fannie Mae, Freddie Mac, and FHA guidelines. Because you are thinking about an FHA loan, here are the guidelines I have been told for FHA:
1. Can purchase right away with no mortgage default
2. Three year wait if in default at closing
3. Reduced wait if the borrower has established good credit and can show extenuating circumstances.

It is very important for you to consult with a very experienced lender who is on top of the guidelines that are changing daily. Based on your description of your situation, you may be able to qualify for the reduced wait. Cantact me if you would like a recommendation of a very knowledgeable lender with over 10 years experience who can help you navigate through your situation.

Warm Regards,
Karen
Web Reference:  http://www.karenmcknight.com
0 votes
Jirius Isaac, Agent, Kenmore, WA
Tue Aug 2, 2011
Mominwa,

I just closed about a month ago on a home for someone that had a short sale less then 3 years ago. His loan was a VA loan. It took some work, but I got it through. I am both a loan originator & a real estate broker & would be happy to consult with you free of charge any time you would like. Just let me know.
0 votes
Mominwa, Home Buyer, Bellevue, WA
Tue Aug 2, 2011
Thank you for your info. We did stop paying after we moved.( 3mos after).and adopted a child who ended up with severe needs. Our date of short sale was in Feb of 09, so it would appear that by Feb of 2012 we would be ok.

Thank you for the replies
0 votes
Gregorio Den…, , San Diego, CA
Tue Aug 2, 2011
The relocation is not a reasonable exception to the FHA rule and from what you said, you only stopped paying for them to take you seriously. Had you relocated and kept your payments current, you could have easily qualify but from your own words, you stopped not because of child care expenses, but to force their hand. Any letter of explanation you write that says anything other than that would be a lie and fraud.

I would be very careful about working with someone willing to state otherwise and have you write otherwise in a letter of explanation.
0 votes
, ,
Tue Aug 2, 2011
FHA requires you are 3-years out from a short sale, however less than 3 years can be acceptable if:

1. All installment (i.e. car loan, student loan, personal loan, etc.) payments & mortgage payments on the prior mortgage were made within the month due for the 12-month period preceding the short sale, and
2. You simply did not take advantage of declining market conditions, and
3. Are not purchasing a similar or superior property within a reasonable commuting distance at a reduced price as compared to current market value

It sounds like you would not fit the definition of #1. However FHA does go on to say that a lender can make an exception to the rule of being in default at the time of sale if

1. The default was due to circumstances beyond the borrower's control (i.e. such as death of primary wage earner, long-term uninsured illness, etc.) and
2. Your credit was satisfactory prior to the circumstances that caused the default

Job relocation isn't a circumstance beyond your control, depending on the amount of expenses and how greatly it affected your finances could be determined to be an extenuating circumstance. You'll need to be prepared with a letter of explanation with all of the details (including a timeline as that is certainly helpful to match up to the other events, i.e. short sale date, when you first went delinquent, etc.) and supporting documentation regarding your child's expenses.

If your child's expenses were not sudden and were easy to manage financially... and the *sole* reason that you went late on the mortgage is in an effort to get the lender to work with you, then that would not qualify for the 3-year exception in my opinion.

There are Fannie Mae & Freddie Mac financing options too, just requiring you to be 2 years out of a short sale (Freddie Mac goes to 90% financing 2 years out, Fannie Mae goes to 80% 2 years out - but PMI insurers are looking for 4-years out in order to go 90%), doesn't matter what the reason was for the short sale or if you went late or not.

FHA & conforming loan limits are decreasing end of September, estimated to be about $506k for King County, WA, but that doesn't look like it'll impact your loan amount.
0 votes
Danuta J. Moc, , Bellevue, WA
Tue Aug 2, 2011
Yes, the first step is your Bank or/and your Mortgage Broker. The next step is working with a REALTOR, Buyer's Agent from Bellevue/Eastside area. When you are ready, I am based in Bellevue and have many options; how to invest in real estate again. Thank you, Danuta Moc, Better Homes &Gardens Real Estate, Bellevue, WA
0 votes
Joshua Leret…, Mortgage Broker Or Lender, Lakeland, FL
Tue Aug 2, 2011
Hello Mominwa,

Please give me a call. There are certain circumstances that will allow for financing within the typical 3 year window of a short sale. Short sales are generally looked at as the same rules as a foreclosure but in situations like yours you may be ok. I would need to speak to you to figure out more and go to my underwriters. We are a national direct lender with in house underwriting. I am licensed in your wonderful state of Washington and we offer exceptional rates with service second to none. I look forward to hearing from you.

Joshua A. Lerette
Senior Loan Officer
Residential Finance Corporation
800.930.7334 Ext. 1108 – Toll Free
813.402.4637 – Direct Line
727.488.7355 – Cell
888.692.5967 – Fax
Josh.Lerette@myrfc.com
http://www.residentialfinance.com
0 votes
Patrick J He…, , Bellevue, WA
Tue Aug 2, 2011
Absolutely! FHA requires 3.5% down. I am in Kirkland. Please call 206-790-7284
0 votes
Gregorio Den…, , San Diego, CA
Tue Aug 2, 2011
From FHA

"Borrowers in default on their mortgage at the time of the short sale are not eligible for a new FHA-insured mortgage for three years from the date of the pre-foreclosure sale."

While some claim they can get an FHA loan done sooner, I can only tell you what FHA says and that I have not been able to do so.
0 votes
Homebuyer Re…, Home Buyer, Renton, WA
Tue Aug 2, 2011
After a shortsale you have to wait 4-7 years before you can buy. At that time you must have good rental history along with reestablished credit.
0 votes
Spirit Messi…, Agent, Tucson, AZ
Tue Aug 2, 2011
Good question. Talk with a local lender and find out, should be a free conversation to have. In fact, in this market it should be the first thing any buyer does if considering. Find out if you are pre-approved and limit? Look at mortgage calcualtor and see what numbers make sense for you. The nice thing is, free conversation to have and a good local lender will not only show you where you are, but what you can do to improve your scores so that home ownership can be part of your future. While working on it, a person can also save for the downpayment as well. Best of luck, & FHA limits are at $317K now, but are set to retreat back come Sept. Again, great questions for a lender.

Spirit
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