If you are facing a short sale, you may feel like you will have a difficult time getting a mortgage in the future. Although it is not the easiest thing to do, you can get approved for a mortgage after selling a home in a short sale. There are a variety of things to be prepared for when you are ready to move forward, including the following:
There is a Waiting Period
One thing you will need to be prepared for is a waiting period. The amount of time will vary on the type of loan you are applying for, whether or not you were in default on your home before the short sale, and your credit score. Depending on all of these factors, you may have to wait two to seven years until you can get another mortgage. There are some very strict exceptions with FHA loans that will not require a waiting period. This includes making all of your old mortgage payments on time for at least 12 months leading up to the sale. This is quite hard to bypass since the loan was likely in default, which caused the need for the short sale.
Work to Improve Your Credit Score
During the waiting period mandated by your lender, use that time to work on improving your credit score. You will need to have a good credit score to get another mortgage after the short sale waiting period. The short sale will hit your credit score somewhat, but it will not be as bad as a foreclosure. Your mortgage lender will require a specific credit score for a new mortgage, which will vary from bank to bank. To improve your score, make sure you are paying your current bills on time and keep your credit balances low.
Pay Attention To Your Credit Report
As you are working to improve your credit score, you should also be monitoring your credit report. You specifically need to check the reporting of the short sale on your report, as they are often misreported as a foreclosure. This can make a huge difference on your credit score. A foreclosure on your credit report can also prevent you from getting a new mortgage for a much longer time period. You will also need to check your report for any inaccuracies that need to be repaired. Failing to check your credit report can result in a lower credit score, prevent you from obtaining new credit, and even require higher down payments on a new mortgage.
Obtaining a new mortgage after the short sale is going to take some patience and hard work. A short sale can be the beginning of a new start as long as you are responsible with your finances from this point forward.
Speak with a company like Doolin Security Savings Bank for more information.
Share14 June 2016
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