Finding financing after a short sale may be within closer reach than you may have first thought. The last half of this year has yielded a wealth of options for those who have walked away from their homes due to a short sale and wish to purchase again.
1) Fannie Mae and Freddie Mac Loans
If at least 2 years (24 months) has passed since the event of your short sale, Fannie Mae and Freddie Mac offer loans with 20% down payment and APR’s currently in the mid 4% range.
2) FHA Loans
The FHA has recently established a new program that can allow for purchases 12 months after a credit event with evidence of economic hardship. Economic hardship is defined by a loss of income, 20% or more over a 6 months period or longer. This is an excellent opportunity for those who either haven’t reached the 2 year anniversary of their short sale, or find the higher down payment unaffordable. In the absence of an economic hardship, FHA will allow a purchase 36 months after the credit event. Downpayment’s for both FHA programs are currently in the range of .5%-3.5%.
3) VA Loans
With VA eligibility, you can purchase 24 months after the credit event. VA loans do not require any down payment. There is a VA funding fee that can get financed into the loan. Rates on this program are low as well. If you’re a veteran, it is worth your time to investigate this option. Call for a rate quote!
4) Portfolio Lenders
Portfolio lenders are private entities that lend their own money to borrowers and keep that loan on the books. Because these loans aren’t sold on the secondary market, portfolio lenders do not need to abide by Fannie Mae or Freddie Mac underwriting guidelines. This allows portfolio lenders to turn a blind eye to past credit events. Currently these loans stipulate 30% down payment and have APR’s in the mid 4% to mid 5% range.
While purchasing after a short sale may be daunting, it is by no means impossible. If your goal is to purchase a home again, there are lenders that are willing to work with you make that a reality.
If you are interested in more information, please contact us: