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Can I sell on a short sale and immediately buy another home? Yes but…

According to this blog post: Short Sale Your Home… Buy Another Home…At The Same Time!.

As a short sale specialist with plenty of former clients having done short sales this is very interesting.  Until I ran into  this article I was under the understanding unless you do, “semi-fraudulent” credit repair to remove legitimate entries left on your report after a short sale, you will not be able to get a new home typically for 2 years is the quoted time. I say that simply because that is Fannie Mae’s requirement.  This is very much better than if you just let a house foreclose. Fannie Mae makes you wait 5 years to get a loan in that case.

This article claims there is a lender that will do a write you a loan for a new house the day after you close the sale on your current home on a short sale. There is a catch though.

If you do a google search on the internet, you will see plenty of sites claiming that FHA requires you to wait 3 years after a short sale or foreclosure in order to get a loan.  However if you look around you will find that there are no FHA guidelines that require a certain waiting period from the time of a short sale in order to get a new FHA loan.  However most FHA lenders have arbitrairly added the 3 year wait into their own guidelines.  The catch is that you have to otherwise qualify for an FHA loan which is no easy task.  The biggest hurdle for at least most of my clients is that is that if they need a short sale they are in a financial hardship.  If they are in a financial hardship they have missed payments.  A short sale doesn’t erase missed payments.  It simply avoids a foreclosure.  In addition to this most short sale lenders will tell you that in order to do a short sale you need to be a certain amount of time behind in your payments or at the very least be able to show on a financial statement that your situation is so dire that you will be quickly going behind in your payments… and even if a lender doesn’t require you to miss payments… if you haven’t missed any payments they have little motivation to work with you on a short sale when they have thousands of more urgent cases of homeowners many months behind in payments that need their attention.  Why all this talk about missed payments?  You can’t get an FHA loan with recent missed mortgage payments.  That is the real catch.

The good news is however that if you have 12 months of good history FHA guidelines do allow you to get a loan which is a lot better than waiting 2 years or 5 years.  However few lenders have been willing to do this in the case of a short sale until now.

The bad news is the lender CA based lender talked about in the article I linked to doesn’t do loans in Ohio yet.  I will keep my eye out for a lender who does do loans like this in Ohio and will notify all my readers when I find that.  Know of anyone that will?  Give me a call 440-427-0123.

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Andy Morris is an Ohio real estate broker with an expertise in selling homes on a short sale.  If your Ohio home is heading towards foreclosure or you owe more than your property is worth, please call Andy at 888-4-STOP-IT  to see if you qualify for a short sale with your lender.

1 comment to Can I sell on a short sale and immediately buy another home? Yes but…

  • admin

    I have talked to several lenders on this. It seems that may lenders will be able to immediately do an FHA loan after you do a short sale if you never miss any payments. However in could find any lenders that would claim to be able to do them sooner than 2 years after a short sale where you also missed payments… In fact if you wait until the short sale gets on your credit report you might still have to wait 2 years even if you never missed payments (depending on you your lender reports it).

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