It’s a pretty hot housing market right now: lots of demand + lower-than-normal inventory mean that housing prices are rising. Even though interest rates are higher than last year’s lows, they are still in the 3s (depending on your scenario, they may be in the low 4s), so many buyers are taking advantage of this opportunity.
Most recently, some new and prospective clients are trying to get their foot back in the door after having gone through a short sale of foreclosure in previous years. Here are the current rules for when you can apply for a new mortgage, if you have undergone a short sale or foreclosure in your past:
|
CONVENTIONAL FINANCING |
FHA FINANCING |
|
|
SHORT SALE |
Up to 80% LTV: 2 years
Up to 90% LTV: 4 years Above 90% LTV: 7 years |
3 years |
|
FORECLOSURE |
7 years | 3 years |
A couple of things to note:
- The time period must be from completion date of the short sale/foreclosure to the application date of the new loan
- If you did a short sale, then the lender must report it to the credit bureaus as a short sale. I have two new clients that were looking to get preapproved. They both had 2 mortgages on the home they short-sold, and the 2nd lender is reporting to the bureaus as a foreclosure, in which case they must fall under the foreclosure timeline requirements. They are trying to get this fixed at the bureau level, but I am not yet sure if they will be successful.
