Do you want to buy a home but are being held back by a short sale on your credit history (or soon to be on your history)? Many American homeowners end up in this position after an unexpected financial emergency, an economic recession, or even a personal crisis such as divorce. But how can you overcome this challenge to buy your next home as soon as possible? Here are five steps to follow.
1. Learn About Exceptions. Most owners who did a short sale know they must generally wait several years before they will be clear to get a new mortgage loan. However, there are important exceptions. If you had made all your payments on time before the sale, for instance, you may be able to get an FHA or VA loan in less time.
2. Choose a Loan Type. Once you familiarize yourself with all the exceptions, decide which you want to focus on. This allows you to concentrate on meeting its particular requirements. There's no point in following the guidelines for a USDA loan, for instance, since there are no exceptions that allow you to buy again in a short period.
3. Check Your Credit. No matter what your mortgage situation, one common element is your credit score. So take this time to get acquainted with it. Many short sellers find that their credit score isn't as deeply affected as it would have been if they had allowed a foreclosure, for example. Either way, though, apply tips for boosting your credit score as soon as possible.
4. Build a Down Payment. Because a short sale is a hit to your reputation as a good credit risk, you can minimize the credit risk you're asking a new mortgage lender to take. How? One of the most universal is to offer a larger down payment. Conventional loans and non-qualifying loans will often look more favorably on a buyer who brings more than 20% to the table.
5. Meet With a Lender. Finally, meet with an experienced home mortgage lending agent to discuss your plans. Now that you've done your own research, meeting with a lender allows you to get your questions answered and to make sure you're on the right path.
No matter what caused your short sale, the ability to move on both financially and emotionally is a valuable part of your recovery. And by setting yourself up to be able to buy another house, you can put that difficult period behind you. Make an appointment to meet with a lender today to get started.