I asked Blake Eagal of Summit Funding to answer some questions regarding buying a home after a short sale. This is valuable information and hope it helps.
How can you begin the process to purchase a home after a short sale?
Reach out to an experienced lender to review short sale dates and loan program eligibility.
What’s the first step?
Verify the exact short sale date based on public records. Each loan program has a different waiting period after a short sale. Depending on the programs you are eligible for, your waiting period could be shorter or longer than the typical 3 years.
Are you ready?
This can be answered a lot of ways. We typically look at if the waiting periods have been met, if the credit scores are sufficient and if the borrowers current budget supports purchasing a home (i.e. are they paying rent or saving a significant amount of money each month which would indicate that they have the capacity to pay a house payment)
How’s your credit?
We only need a 580 credit score, even after short sale, however credit will be scrutinized more closely for buyers who have had a major derogatory credit event, like a short sale, foreclosure or bankruptcy. I would recommend working to get credit scores to at least 620, and up to 640 for borrowers who need down payment assistance.
What needs to be done to clean up your credit?
Every credit report is different and there is a lot of misleading information out there. Typically borrowers either need to clean up, rebuild or a little of both. Cleaning up would entail bringing accounts current, settling judgements and paying down balances. Rebuilding typically involves opening accounts for borrowers who lack open accounts. Sometimes we need to do both. Credit is highly individualized and while there are some overriding themes, the best credit plan is going to be specific to the buyer. Also, it is important to note, that something that may create the maximum score improvement over a 12 month period, may actually be a negative in the short term (this could be opening a new account or settling a collection)
What else do you need to know?
There is a lot of information out there and it can be difficult for buyers to determine what specifically applies to them, which is why they should meet face to face with an experienced loan officer. There is no cost for the consultation and if someone is serious about buying a home, it will be the best investment of 60 minutes they can make.
See the matrix below which is a really handy reference for wait times after derogatory credit events.
Should you have more questions, please feel free to call Blake or myself as we'd love to support your real estate needs.
I'd like to thank Blake Eagal of Summit Funding for helping with this blog.
Author:Julie Cosgrove BRE #00828743 Phone: 209-298-0252 Dated: April 10th 2015 Views: 330 About Julie: Julie was born and raised in Stockton CA, she married her high school sweetheart George and has 2 bo...
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About Julie Cosgrove Real Estate Professionals at Keller Williams Realty
California REALTOR® Julie Cosgrove is a driven individual that not only pushes herself to achieve excellence but will make it her priority to transform her client’s dream home into a reality. She and her team believe in Exceeding Expectations of their clients
Julie and her team’s positive approach and no nonsense attitude will help guide their client’s through their transaction. They will outline the buying and selling process, stay in close contact and constantly affirm that they have their clients best interest at heart. She and her team strive for trust, coupled with support, so her clients can enjoy a smooth transaction.
Recently Julie started her sister company, One Simple SOLUTION. As Julie’s real estate business grew, she saw a need to help seniors downsize or transition into senior-centered living. The desire of this company is to make our Senior Citizens and families feel as calm and stress free as possible during their transition from one home to the next. One Simple Solutions works hand in hand with each realtor to make sure that their clients is completely taken care of from the packing stages to the complete move to their new location. No stone is left unturned. We offer organization, helpful tips and more to make this move as uncomplicated as possible.
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"I would be extremely happy to highly recommend Julie Cosgrove and her wonderful staff at Keller and Williams to ANYONE who was looking for assistance with either buying or selling a home, especially for help - with the now popular - short selling of a home; as was the case for our family. Julie Cosgrove is a Tiger. She and her staff were unrelenting when it came to dealing with the banks on our behalf. She rescinded the banks foreclosure attempts on three separate occasions and always kept our best interests at heart. Mrs. Cosgrove was a joy to work with. Always positive and highly motivated, this professional and her staff are well deserving of the highest recommendation in the City that can be given by anyone. There is NOWHERE ELSE that we would recommend anyone to go other than to see Julie Cosgrove over at Keller and Williams. This Woman is a rock-star, and despite the problems that we had with the banks, she never let them slow our short-sale down. She is awesome!"