How to Buy After Going Through a Short Sale
If you sold your previous home with a short sale, you can't hide this fact from future mortgage lenders. Your short sale will appear on your credit report, and a credit check is a standard part of the mortgage approval process. A short sale, however, doesn't necessarily bar you from qualifying for a new home loan.
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Facts
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Spending time improving your credit is one of the most beneficial actions you can take after a short sale to ensure that you'll qualify for a new mortgage in the future. Pay down your credit card debts and pay all creditors on time, and your credit scores will gradually improve.
Significance
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The Federal Reserve Board recommends that you explain the circumstances surrounding any past financial problems, such as those that necessitated the short sale, to potential mortgage lenders. Demonstrating to your lender that you no longer suffer financial strain can help you qualify for a new mortgage---even if you have questionable credit.
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Considerations
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You must wait 3 years after your short sale to apply for a Federal Housing Administration loan if you weren't current on your mortgage payments when you sold your home or could afford your payments but participated in a short sale simply to unload the property. You can apply for a conventional loan, however, at any time.
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- Photo Credit expensive home image by Karin Lau from Fotolia.com
