FHA Guidelines on Short Sellers Buying Again
New FHA guidelines may allow a “SHORT SALE SELLER” to become a buyer again under the FHA loan program immediately after discharge of prior short sale.
Not every SHORT SELLER will qualify under the new FHA guidelines. The home you purchase must meet FHA’s standard lending guidelines, and here is what you would need to do to participate in this program:
1. A 640 FICO credit score or better.
2. You must be current on all installment payments and your mortgage.
3. No bankruptcy or foreclosure on your credit in the last 7 years.
4. The home you are purchasing must be inferior in price to the one you are selling. (We don’t know the exact guidelines, so check with your FHA lender broker representative).
5. You need 3.5% or more down payment for the new purchase.
You should:
a. continue making your mortgage payments on home you are selling each month,
b. consult with a Mortgage Professional and fill out FHA’s Short Sale and Buy Application,
c. get pre-approved for your next home loan.
d. Put your SHORT SALE home on the market with an experienced REALTOR.
e. After the SHORT SALE is approved by lenders, start looking at a home to buy.
f. Close on selling your home and on purchasing the new property.
This new FHA program requires: (i) the borrower (short seller) must be current on their payments for the preceding twelve months, and (ii) the SHORT SALE cannot be strategic.
Examples of STRATEGIC SHORT SALES: (a) I don’t want to make my payments anymore, or (b) I no longer have equity in my home, or (c) I am tired of pouring money into a non performing liability. Each of these would be considered strategic reasons for SHORT SALE.
For complete details on this FHA short seller recovery program please HUD letter of December 2009.
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REALTORs and real estate professionals should never advise a homeowner to stop making their payments.
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This is for information only and not the providing of legal or tax services. You should consult with an experienced mortgage broker professional in your area to determine whether you qualify for this FHA program.
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Thanks for contacting us about SHORT SALES, homes and properties at Orange County, California, and we are here to help you.
Harrison K. Long - solutions for real estate and business - REALTOR and broker associate, Coldwell Banker Residential Brokerage. 949-854-7747 (phone) – ExploreProperties@gmail.com (email) - CA DRE 01410855 – SFR short sale and foreclosure resource certified by the National Association of Realtors.
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This is for information only and not the providing of legal or tax services.
