How To Buy A Home After A Short Sale
I received another reader question today from somebody who wants to buy a home after a short sale.
This topic is one that will start to get a whole lot of national attention, as millions of people who normally own a home will be branded as "unlendable" for a period of time.
It is the primary reason that I am writing a series of articles about credit repair for homebuyers and what people need to do to get back into home ownership.
To Buy A Home After A Short Sale Requires Time
I received the following question from "LE":
I had a forced relocation due to the economic downturn about 18 months ago. I sought legal advice, hired an attorney and did a short sale, (completed this about two months ago). I was told in the beginning this would just ding my credit and if I maintained my other obligations, I would be able to purchase another home in a month after my SS finalized.
Now I am being told NO by every lender I have contacted. Never had a late payment or any scars on my credit except the SS, not even a late payment from any other obligation. Rating is 716 currently. I would expect to pay a little higher rate, but can't even get someone to write a loan. I would like to purchase a home in Tallahassee. Any suggestions? Can you point me to a lender, I am not a bum and have a very good income.
Unfortunately, only part of the financial advice that LE received was accurate. I suspect it was smart to do the short sale, and it was smart to stay current on his financial obligations (thus only a ding on his credit ... which now is over 700). But from everything that I have read, LE will have to wait a total of 3 years from the finalization of his short sale before he will qualify for a government-backed loan to buy a home after a short sale. (Technically, there is a two-year wait solution with a 20% down payment).
You Don't Have To Wait After A Short Sale
So LE has two options. He can rent until the waiting time has expired (which could change to less than three years at any time) or he can figure out how to buy a home after a short sale without a government backed loan.
For the time being, it is likely banks will not be able to help him. They are not flush with creative loan products right now, and the sting of the housing market collapse is still smarting.
I suspect that we will see changes in this over the next year or two, as investors realize a whole lot of people like LE who have maintained a mortgage for years are out there.
So what can LE do now?
How To Buy A Home After A Short Sale
There are many creative solutions for buyers like LE. He can find the right home and make a very attractive lease-purchase offer to the seller. He can make payments to them for 34 months, and then close on the purchase when he is credit worthy again.
He could also buy a home after a short sale with owner financing and/or do a wrap-around mortgage. With strong credit, it won't be hard to help LE buy a home right away.
Every form of "creative financing" will bear some sacrifice and risk, so it is imperative that LE receive guidance from a trustworthy real estate professional. Additionally, he should plan on speaking with a real estate attorney who can counsel him on the risks incurred with each creative solution.
I expect my firm will help hundreds, if not thousands of people like LE in the coming years. We have already begun the training and education process for our real estate agents to be able to guide these special homebuyers through the creative solutions that will be required to buy a home after a short sale.
If you would like to buy a home after a short sale and want to know the most creative agent with whom you should work, just drop me a note and we can ensure you work with a knowledgeable, trusty worthy real estate professional.
*Joe Manausa Real Estate is a brokerage company headquartered in Tallahassee, Florida. Its unique business model provides specialists to both home sellers and home buyers, and the results speak for themselves. JMRE has significantly more 5-star reviews on google than any other local competitor. Joe Manausa Real Estate is a leader in internet marketing and utilizes search engine optimization, email marketing, social media and data analytics to get their clients’ home sold faster and for more money than any other Tallahassee brokerage firm. For more information, visit www.manausa.com or call us at (850) 366-8917.
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