Buying After A Short Sale
Life After A Short Sale If you are considering or have recently completed a Short Sale you are most likely wondering “how soon can I buy again?” This package is NOT designed to offer you legal advice about the execution and completion of a short sale. Our goal is to help prepare you to purchase your next home. After a Short Sale you may be dealing with different issues relative to your credit, your income/assets and your future living arrangements. The following documents will aide you in creating a road map that will help lead you back to home ownership.
Determine Your GREEN LIGHT Date What is you GREEN LIGHT date? This is the earliest date that you are eligible for a new mortgage after your Short Sale Completion Date. Up until this date, you would be declined for a new mortgage based solely on your Short Sale. Your GREEN LIGHT date does not necessarily equal the date that you will be approved. Eligibility means you can now attempt to get approved for a loan relative to your Short Sale Completion date. Getting approved requires that you position yourself to qualify for a loan. The remainder of this program will help you do just that.
Different Strokes for Different Folks Each loan type (Conventional, FHA, VA, USDA and Jumbo) has different rules and timeframes when it comes to buying after a Short Sale. Your GREEN LIGHT date will be different depending on your circumstance and what type of financing you intend to use to purchase your next home. The following document entitled “When Can I Buy After A…?” will help you determine your GREEN LIGHT date.
Jeremy House, Loan Officer, CMPS
602.433.2149
jhouse@primelending.com | www.JeremyHouse.com | NMLS: 184066 4450 S. Rural Rd, Suite A100 • Tempe, AZ 85282
Buying After A Short Sale
WHEN CAN I BUY A HOME AFTER (Short Sale, Bankruptcy and Foreclosure) FHA
VA Loan
Short Sale
0 Months if Borrower Meets HUD Guidelines (1)
Foreclosure
3 Years from Date of Completion
0 Months – If Short Sale 2 Years from Date was not on a VA loan of Completion w/ extenuation circumstances 2 Years From Date of 5 Years from Date of Completion Completion
2 Years from Date of Completion w/ extenuation circumstances 5 Years from Date of Discharge
Chapter 7 Bankruptcy
2 Years from Date of Discharge
2 Years from Date of Discharge
4 Years from Date of Discharge
4 Years from Date of Discharge
Chapter 13 Bankruptcy
1 Year of Payout Phase has passed (2)
1 Year of Payout Phase has passed (2)
2 Years from Date of Discharge 4 Years from Date of Dismissal
3 Years from Date of Discharge
(1)
Conv. Loan
USDA Loan
HUD guidelines include but are not limited to the following: a. Buyer must not have been late on their mortgage or any other debt that reports to the credit bureaus for a period of twelve months prior to their Short Sale Completion Date b. Buyer must purchase a new home at least 10 miles away from the home that was sold through a Short Sale
(2)
Payout history during Ch. 13 Payout phase must be satisfactory
(3)
(all) The guidelines contained in this document are subject to change without notice – Document created 08/2010
Jeremy House, Loan Officer, CMPS
602.433.2149
jhouse@primelending.com | www.JeremyHouse.com | NMLS: 184066 4450 S. Rural Rd, Suite A100 • Tempe, AZ 85282
Buying After A Short Sale
POST SHORT SALE - STRATEGIES (I) Tips to Help You Get Pre-Approved Again! CREDIT/TRADELINE REQUIREMENTS Make sure that you have at least 3 open trade lines (or accounts) that are currently and actively reporting on your credit report • • • •
Credit Cards Student Loans Auto Loans Other Installment Loans
These trade lines must be your OWN accounts and NOT accounts where you were added as an “authorized user.” Make sure that these accounts show on-time payments each and every month until you purchase again. If you have credit cards try to keep the balances as low as possible while make payments on monthly. Closing the Accounts may lower your score.
ALTERNATIVE CREDIT (if you won’t have 3 trade lines over the next few years) If you cannot obtain at least 3 trade lines (as mentioned in the above section) you will want to make sure that you will be in a position to have sufficient “alternative credit.” The first alternative trade line will need to be your Rent History (see next page). Your additional alternative trade lines can be established from any account that you make monthly payments on monthly such as a utility bill, car insurance, cell phone etc… If you are not presently on enough of these types of accounts try to add yourself to at least two 12 months before your GREEN LIGHT date. Jeremy House, Loan Officer, CMPS
602.433.2149
jhouse@primelending.com | www.JeremyHouse.com | NMLS: 184066 4450 S. Rural Rd, Suite A100 • Tempe, AZ 85282
Buying After A Short Sale
POST SHORT SALE - STRATEGIES (II)
Tips to Help You Get Pre-Approved Again!
FUTURE HOUSING EXPENSE PAYMENTS Make ALL rent payments with a check that is linked to a personal checking account. The individual that is going to be buying a home in the future must be on the checking account and the checks themselves. DO NOT pay your rent with cash or a money order and DO NOT make your rent payments late. When you re-apply your most recent 12 month’s rent history will be critical. ***If you live “rent free” it is imperative that you establish 3 actual trade lines (see previous page) as alternative credit/trade lines will not work without a rent payment history.
INCOME/ASSETS AND EMPLOYMENT Any gaps in employment during the 2 years preceding your new loan application will need to be accounted for (especially gaps greater than 6 months). All income being used on the file for qualification purposes will need to be fully documented. If you do not receive a W2 at the end of the year you may want to contact us to discuss this further. Generally speaking, the more money you have saved in a “liquid” asset account the better. During the time you are waiting to buy again, try to establish a pattern of routinely saving money toward your next home purchase in accounts that have the future buyer on them.
Jeremy House, Loan Officer, CMPS
602.433.2149
jhouse@primelending.com | www.JeremyHouse.com | NMLS: 184066 4450 S. Rural Rd, Suite A100 • Tempe, AZ 85282
Buying After A Short Sale
WATCH YOUR CREDIT LIKE A HAWK
Two of the most critical factors in getting approved for a Home Loan are your credit rating and credit history. After a Short Sale, it is even more important to maintain an optimal credit profile. We are here to help! There are two steps that you must take to ensure your credit is in the best shape possible when it’s time to buy again.
Our FREE Credit Monitoring Program 1.
Educating you on the basic anatomy of your credit score – The following section entitled “Credit – How Does It Work?” will help you understand how your credit scores are determined.
2.
FREE - Monitoring Your Credit – By enrolling in our credit monitoring program, you will receive free credit reports twice a year until you reach your GREEN LIGHT date. Upon enrollment we will issue your first report. Every 6 months after that you will receive an updated tri-merge credit report (from all three bureaus - Equifax, TransUnion and Experian) showing all three scores, and complete trade line detail/history. TO ENROLL: Contact our team at 480-776-5102 and ask about the Buying After a Short Sale Credit Monitoring Program.
Jeremy House, Loan Officer, CMPS
602.433.2149
jhouse@primelending.com | www.JeremyHouse.com | NMLS: 184066 4450 S. Rural Rd, Suite A100 • Tempe, AZ 85282
Buying After A Short Sale
How Your Credit Score Is Determined 35%
Payment History
30%
Amounts Owed
15%
Length of Credit History
10%
New Credit
10%
Types of Credit Used
Payment History – 35%
Amounts Owed – 30%
• Payment information on many types of accounts • Public records and collection items • Details on late or missed payments • How late? • How much was owed? • How recent? • How many there were?
• • • •
Length of Credit History – 15%
New Credit and Inquiries – 10%
• How long credit accounts have been established – in general • How long specific credit accounts have been established • How long it has been since you used certain accounts
Amount owed on all accounts Amount owed on different types of accounts Balance owed on certain types of accounts How much of any credit line or revolving account is being used • How much is owned on installment accounts
• What types of credit accounts you have and how many of each • Total number of accounts
Types of Credit – 10% • How many new accounts you have • How long it has been since you opened a new account • How many recent requests you have made for credit (credit inquiries) Jeremy House, Loan Officer, CMPS
602.433.2149
jhouse@primelending.com | www.JeremyHouse.com | NMLS: 184066 4450 S. Rural Rd, Suite A100 • Tempe, AZ 85282
Buying After A Short Sale
Jeremy House, Loan Officer, CMPS
Jeremy is a Certified Mortgage Planning Specialist with PrimeLending, A PlainsCapital Company. Originally from Upstate New York, Jeremy moved to Arizona to finish his education at Arizona State University. With a deep commitment to exceeding his client’s expectations in both the area of knowledge and service Jeremy has continued his education in the mortgage industry by earning his Certified Mortgage Planning Specialist designation from the C.M.P.S. Institute and by graduating from the XINNIX Mortgage Academy. Both of these organizations included instruction from the mortgage industry’s top trainers.
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Jeremy House, Loan Officer, CMPS
602.433.2149
jhouse@primelending.com | www.JeremyHouse.com | NMLS: 184066 4450 S. Rural Rd, Suite A100 • Tempe, AZ 85282