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What Are The Basic Questions Need To Know About Mortgage After A Short Sale
Published in Homes on Mar 01, 2017
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Short selling is becoming more popular as house prices are crashing as a result of sub-prime crisis. It basically depicts the act of selling a property for less the value of the mortgage for the property. This can be an extraordinary way to avoid foreclosure of your property.

I wouldn’t want you to have the thought that getting another mortgage after you have short sold your property is impossible. Truth be told, it is very possible! Short selling is obviously damaging your credit score however the earlier you react to this the better for your long term finances.

The first thing to do when considering a short sale is to contact a real estate attorney. This is because there will be a legal agreement. When negotiating, the attorney can include a clause to the final sales amount in the contract. This contract may be stated as follow:

The home owner will not be responsible for any further collection action from the first or second mortgage holders after the sale.

It is important that both parties are involved in this clause to avoid further collection activity after sale.

Most home owners have this believe that once they finish selling they are free and good to go. This has never been the case!

Collection activity starts almost a year after the sale and is often persistent. You are obligated to the remaining debt without that clause in the contract, especially to the second mortgage holder. These collection agents will pursue you aggressively, destroy your credit and may even indict you for the amount that is still owed. Of course, these collectors add their fees to the debt hereby increasing the debt and making it more difficult to pay off.

 

Here are three basic questions you need to answer to guarantee success after a short sale:

1.   Do You Have A Record Of Any Late Payment On Your Current Mortgage?

There is a possibility of you being denied a new mortgage loan if there is a record of any late payments during the past 12 months on your current mortgage.

 2.   Did The Short Sale Fully Pay Off Your Current Mortgage?

There are some companies that will have the seller sign a promissory note to reimburse some or even all of the deficiency.

 3.   Why Would You Like To Short Sale Your Current Home?

You must have a genuine reason why you are doing this; it could be relocation, upgrading etc. You can't just short sale your home in order to take advantage of the current market conditions.

If you can't meet the above prerequisites, you will have to wait for a minimum of 3 years in so as to qualify for a government mortgage and within 2 – 7 years for a conventional mortgage depending on the condition for which you completed the short sale.

Ensure that you don't present an unintelligent reason for requesting a mortgage. For instance, if you state that you can't afford the cost of the mortgage payment any longer, when your lender audits your current mortgage payments and finds out that you are current, you probably will be turned down until you fall behind in payments. However, if your reason for moving is because you need to relocate, then your request may be granted without delayed payments.

If you have had a short sale with late payment, FHA – Federal Housing Administration mortgage loans allow you to buy another home after 3 years. They allow you to buy a home with just a 3.5% down payment whereas the seller pay up to 6% of the sale price towards your closing cost. This will help you keep your pocket expenses low.

Rustic Housing mortgage loans allow you to buy a new home after 3 years if you have had a short sale with late payments.

Rural Housing Mortgage loans offer you to purchase a home with just no down payment at all yet the seller pay up to 6% of the sale price.

Conventional mortgage loans only allow you to purchase a new home after 5 years of a short sale.

One of the best ways to improve your credit score is by getting a mortgage and paying it off. This will enable you to have that financial freedom you desire. Short selling a property shouldn’t stop you from owning your own home. With the amount of pressure exerted by finance companies to provide reasonable/affordable mortgages on simple terms, the chances of you getting a reliable mortgage are much higher than they were only a couple of months back.

Short selling has become a widely rehearsed form of real estate selling in the last five years due to the market. Most banks don't care about the process and they continually change their guidelines. Even those real estate agents that specializes in short sale cannot cope with these diverse rules and regulations set forth by many banks or lenders. Thus it is essential to have an attorney involved in the process.

This content has been written by an expert associated with House Value Store, known to offer excellent assistance on mortgage industry.

Ronei Daselva - About the Author:

I write about technology, real estate, software and general articles.
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