Buying again after previous short sales

12 Replies

Hi all! I'm a newbie! I posted in the Newbie forum but figured I'd post here too! I have a few bucks in the bank and after reading several books and getting the "itch" again, I want to invest in real estate. A little background:

My husband and I currently rent our primary home (after previously short selling our other homes) and want to invest in properties before buying another primary home. It's been 2 years since we sold our previous homes so I'm thinking we would either need to go Conventional or find a seller who is willing to do a seller financing transaction. I'm not looking to purchase an expensive property to start off. Maybe anywhere between $25-75k and it would be a rental. From what I've read and researched, this seems to be the better route and it will set us up to bring in more money. If successful, it would provide a better future for our daughter when it's time to go to college and provide us with a bigger return as opposed to our $$$ sitting in a bank account.

My questions:

Should I start off by trying to get financing through a bank?

Does anyone know how to go about asking for seller financing?

Which would you prefer?

Can we get Conventional financing 2 years post short sale if we have 20-25 percent to put down?

I have a decent credit score , a great income and very little debt. I'd be looking to purchase the first the property on my own. Thanks in advance!

Originally posted by @Nelly R. :

My questions:

Should I start off by trying to get financing through a bank?

Does anyone know how to go about asking for seller financing?

Which would you prefer?

Can we get Conventional financing 2 years post short sale if we have 20-25 percent to put down?

I have a decent credit score , a great income and very little debt. I'd be looking to purchase the first the property on my own. Thanks in advance!

1. It depends on your credit score. Most banks are looking for credit score over 700, if they do FHA loans then 640.

2. Mr seller, could you help me finance the house?

3. Seller financing.

4. It depends on your scores.

Actually, FHA is more liberal with this than conventional. You need to sit down with a good mtg broker. The circumstances that caused the short sale, how many payments were missed(more important than the short sale "event" itself), and payment history since then, particularly in the last 12 mo.s, all factor in. There is no set, across the board, answer for "how long after my short sale can I get another loan"? Seller financing can be great, but usually the ones offering it are asking a price that is over market value.

If you had a short sale but weren't late in on the mortgage in last 12 months prior to the short sale you can get financing immediately.

If you were late as most people are when they do a short sale its 3 years from the date you sold the house until you can get financing.

@Ted Schmidt -Thank you for your response. My credit score is a little over 700. Possibly around 710-710. I thought most sellers would list the option of seller financing but I guess I could just ask the listing realtor.

@Wayne Brooks and @Ophelia Nicholson - I know with FHA you have to wait 3 yrs if you were late on payments (and we were) so with conventional, I figured I could buy in 2 yrs with 20 percent down. I was told buy a few banks that I could go conventional/Fannie Mae with 20 percent down; however, I'm not sure if it has to be for OO properties only.

@Nelly R. The qualifications for non OO purchase thru a lender are more stringent than an OO so I would assume the wait after short sale would be longer. The credit scores are higher and the DTI is lower.. Reserves are also higher. I will check with a lender I know and get back to you..

I don't know many people who go from short sale to non OO purchases.

@Ophelia Nicholson - Thank you! Your help is greatly appreciated! I figured that would be the case. I know I will probably have a hard time getting a bank to give me a loan right now, despite the fact that I really don't want to borrow that much. That's why seller financing seems to be better to me right now.

Most lenders will take a very hard look at why you have done a short before they trust you with another loan. I wish you good luck.


Joe Gore

@Joe Gore THANK YOU!

Hello @ Nelly R

I'm in a similar situation-- my short sale closed last year and my next property will be an investment. I'm in the planning phase for my next purchase.

Here's the information I gathered YESTERDAY (lol) after contacting several financial institutions (the info below is for conventional loans, FHA doesn't apply since it's not regarding primary residence)...

- Chase, Bank of America and US Bank: 4 year waiting period from date of sale. CREDIT SCORE REQUIREMENTS RANGED FROM 620-740!

- Sun Trust: 3 year WP with 640

I started getting discouraged until I thought to CALL THE CREDIT UNION!

- Kinecta Federal Union: 2 year WP; I've been a member since 2001-great credit union. They operate in about 30 States

- Navy Federal CU: NO WAITING PERIOD (evaluated on a case-by-case basis).

So, you may be closer than you think :)

Hope this helps you out!

I think the lenders should have anyone who does a short sale be on the hook for the different and cannot buy another home until the different is paid, but that is life in the fast lane of screwing the lenders.


My 2cents,


Joe Gore

@Stacie Stac - thanks for the info!!! I heard credit unions are great too! I got pre approved through PNC, which I'm super excited about! @Joe Gore thanks for your opinion......different topic, different post! :)

@Nelly R that's so awesome!! Im clapping and smiling for u. Please keep us posted!

Stacie

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