Facts on getting a mortgage after a short sale

When you’ve just lost your home to a short sale, the first thing on your mind is probably
getting a new one, at least within the next few years. But few people are aware of the rules
surrounding post-short sale mortgage and credit. Waiting time, down payments, and rates of
approval are all affected by your short sale, and more importantly, by your credit score after a Short Sale.

Read on for some basic facts on getting a mortgage after a short sale.

How long do you have to wait?

For Fannie Mae and Freddie Mac-backed loans, you have to wait two years before taking out
another mortgage. This wait time was recently reduced from five years. However, if you were
not more than 60 days behind prior to the short sale, you do not have to wait the whole two
years—you can get a new mortgage right away provided your post-short sale credit can get you
decent rates.

Does a short sale affect your credit score?

Needless to say, your credit suffers a blow after you do a short sale, although it’s not as drastic
as a foreclosure. That’s why experts recommend waiting two years even if you’re part of the
exception mentioned above. A bank may decide to give you a loan, but offer higher interest rates
to make up for the risk. To get optimal mortgage rates, try to bring your credit score up to at least

680. This way, even if the short sale is still on file, lenders can see that you’ve stabilized enough
to afford a new home.

What kind of loan can you get after a short sale?

The new Fannie Mae and Freddie Mac rules allow you to get a new mortgage after two years
with an 80% loan-to-value ratio. This means you need to make at least a 20% down payment
(your bank finances 80% of the home price). After four years, the maximum ratio goes up to
90%, meaning you can make just a 10% down payment.

How do you get better rates?

Besides a good credit score, you also need a steady payment history and a good credit ratio to
get reasonable mortgage rates. The short sale will stay on your credit report for a while, so it’s
important to make up for it with positive marks. Pay off any debts you still owe to lower your
debt-to-income ratio to the ideal 31%. Get credit reports from all three credit bureaus and fix any
errors if necessary.

AUTHOR BIO

Author is a professional short sale agent who completely handles the Short
Sale process and helps people who need short sales, or who want to sell for any reason. He also
helps people who are having difficulty but want to keep their home. Visit his website to get more
information about Short Sale, Mortgage Short sale: - http://www.shortsalesafe.com





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Blog post written by the Dowell Taggart Team of RE/MAX Best Associates

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