can we get a loan after a short sale on a rental property?

Asked by Jbrodnan, Williamsport, PA Sun May 20, 2012

We had to do a SS on a investment property in CO, do to renters not making payments we couldn't pay 3 months worth of mortgage just b4 the SS went thru. This was 1 1/2 years ago. Other then this we have excellent credit, very low debt and great income. We own & live in our current home for 5 yrs w/excellent history (have always been on time w/payments etc). My husbands job is moving us from TX to PA. As I say we have a mortgage here, but from talking to banks we can't get a loan there. We don't want to rent as we've been homeowners for the last 12 years or so. Doesn't seem right that we can hold a current mortgage here but can't get a new one there because of a horrible situation on a rental. The rental used to be our home until we moved to TX, this was never bought as an investment property we just couldn't sell it at that time. Any suggestions appreciated. We feel helpless.

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2
Alan Openshaw, Mortgage Broker Or Lender, Southampton, PA
Sun May 20, 2012
Hello JBrodan,

A short sale is considered the same as a foreclosure with any lender that is following fannie mae guidelines. and you will have to wait a full two years prior to making a loan application prior to being considered for a fannie Mae or FHA loan. If you are really strong otherwise and have a large down payment you might condider a portfolio lender (local bank that lends and gets the funds from a source other than fannie Mae.

Regards,
Alan Openshaw
Cornerstone Lending Inc
Southampton Pa 18966
215 953 0800
cell 267 992 7276
VOTED BEST IN BUCKS 2010
NMLS ID 143960
0 votes
thanks for the info Alan. several large banks that i've talked to have also suggested I speak to a local bank in PA to see if they'd be willing to help us. When you say "large down payment" how much would you say that'd be... is 20% the norm? we have 10% for sure now but in 6 mnths when hopefully we could get a loan again maybe we could get 20% but it'll hard.
Flag Sun May 20, 2012
Mike Papanto…, Agent, Arvada, CO
Sun May 20, 2012
Hi J
Short sales will normally preclude you from obtaining a mortgage for at least 2 years. It doesn't matter that it was an investment property as opposed to your personal residence. It affects your credit the same way. I would contact a good mortgage lender in the area where you are moving to and ask them when they feel you will qualify. If it is two years, you will only have 6 months more to wait. If you feel that you have to buy right away, there are always hard money loans which you may be able to obtain. These are loans that are used often by investors for a short time to buy a home, fix it up and then sell. The interest rates on these loans are usually very high, like 15% or more, but they are for a short period of time and don't hurt so much in the long run. This is one option. But, I wouldn't risk it if there's a possiblity that you won't be able to get a loan after 6 months. You might find yourself in the same situation a second tome where you can't make the payments. It is an option to explore, however.
The other option is to bite the bullet and rent for 6 months or a year until you can again qualify for a loan.
I wish you the best and contact me if there's anything more I can help you with.
0 votes
It may be better for us to rent at first anyway since we aren't familiar with the new state we are moving to. So I like the option of renting for 6 months and then our 2 yrs wait would be up to maybe then get approved again. After 2 yrs am I correct that you'd have to have 20% down? Or do you think some small local lenders may allow smaller say 10% down? We currently have at least 10% saved just not 20%.. thanks for your info, very helpful.
Flag Sun May 20, 2012
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