As a Realtor who has been heavily involved closing WILMINGTON NC SHORT SALES over the last two years, one of the questions that I get asked quite often from home sellers is how long will it take before I will be able to buy a home again.
The answer to this question does not have any clear cut and dry answer. There are quite a few variables involved when trying to figure out when someone will be able to purchase a home after a foreclosure or short sale
Going through either a short sale or a foreclosure has the potential to seriously impact ones credit. Government entities Fannie Mae, Freddie Mac and FHA do not directly loan money to individuals but are the governing body that work with lenders to guarantee loans and free up money to provide mortgages.
Banks typically have the authority to lend to whoever they want but will generally follow the guidelines set forth by these entities. There are some lenders of course that will take greater risks with some borrowers than others.
Below are the general guidelines that FHA, Fannie Mae and Freddie Mac follow when considering a loan after a short sale or foreclosure:
Short sale with FHA Loan
- Can purchase right away with no mortgage default
- 3 year wait if in default at the closing
- Reduced wait if the borrower has re-established good credit and can show extenuating circumstances
Short Sale With Fannie Mae Loan
- 2 year wait if the borrower puts 20 % down
- 4 year wait if the borrower puts between 10% to 20% down
- 7 year wait if the borrower puts less than 10% down
- 2 year wait if the borrower can show extenuating circumstances and puts more than 10% down
Short Sale with Freddie Mac Loan
- 4 year wait before being able to get a loan
- 2 year wait if the borrower can show extenuating circumstances
Foreclosure with an FHA Loan
- 3 year wait before being able to get a loan
- Reduced wait if the borrower can show extenuating circumstances and re-establishes good credit
Foreclosure with a Fannie Mae Loan
- 7 year wait from the completed foreclosure sale date
- 3 year wait if the borrower can show extenuating circumstances. Additional underwriting requirements apply for 4 years after a 3 year waiting period.
- 7 year wait for a 2nd home, cash out re-financing, or an investment property
Foreclosure with a Freddie Mac Loan
- 5 year wait from the completed foreclosure sale date
- 3 year wait if the borrower can show extenuating circumstances
** As a side note a deed in lieu of foreclosure follows the same guidelines as FHA’s foreclosure policy, the same as Fannie Mae and Freddie Macs short sale policy.
When analyzing the difference between completing a short sale or going through a foreclosure in regards to purchasing another property in the future it boils down to the waiting time which is more favorable in a short sale.
*** The above information for waiting periods before buying a home after completing a short sale and foreclosure was sourced by the Fannie Mae and Freddie Mac selling guides along with the FHA handbook.
If you are need to short sale your home or condo in Wilmington, Hampstead, Leland, Rocky Point, Wrightsville Beach, or Carolina Beach get in touch! I would love to interview for the chance to represent your best interests.
I am successfully completing short sales throughout the Wilmington NC and Surronding areas. So far, knock on wood, I have a 98% success rate for short sale approval! Short sales are specialized transactions that are critical to have the right Realtor representing you. Do not make the mistake of picking an agent that does not understand how to get to the closing table on a short sale. www.shortsalewilmingtonnc.com
If you are outside the Wilmington NC area and need to do a Short Sale please feel free to contact me and I would be happy to refer you to a Realtor in your location that handles short sales and knows what they are doing! I have referred short sales to other Realtors all around the country.
Nilesh Jethwa (CDPE)
WILMINGTON NC SHORT SALE EXPERT