There are three major events that can effect when a borrower can obtain a home loan. They are: bankruptcy, foreclosure, and a short sale. Recently, Fannie Mae announced that starting on August 16, 2014, they will be changing the waiting period to obtain a loan after a short sale from a minimum of two years to four years. Currently, there is a staggered waiting period that allows a home owner to buy a new home with a conventional loan in is as little as two years after a short sale if they have at least 20% to put down on the loan (the time periods are greater if they have less than the 20% to put down).
Unfortunately, starting August 16, 2014, the minimum waiting period after a short sale will increase from two years to four years. The one silver lining to this change is that borrowers who have reached the four year waiting period will now be allowed to put down as little as 5% on their mortgage to purchase their new home. As part of this change, Fannie Mae stated that if the short sale was due to “extenuating circumstances” the waiting period could still be as little as two years. Fannie Mae has not yet released their official definition of “extenuating circumstances” but stay tuned because they are expected to release this information by the end of this month (July 2014).
What does this mean for you? If it has been longer than two years but less than four years since you had a short sale and you were hoping to buy a home in the near future, there’s still hope, but you’ll need to act quickly. Contact me immediately if you feel you fall into this category. I can refer you to a lender who can close a loan under the current guidelines (i.e. two year waiting period with 20% down) if you go under contract by August 15, 2014 (note that this is the contract acceptance date, not the closing date). Also, it’s possible you may meet the “extenuating circumstances” mentioned above. Either way, you’ll want to have a free, no obligation consultation with a lender to help you! I’m happy to get you in front of the right lender if you fall in this category! Give me a call today at 602-295-9695 or email me at [email protected]