The Department of Housing and Urban Development which puts out the guidelines for borrowers to qualify for a FHA loan has just released some new rules for borrowers selling their current house as a short sale and then getting a new FHA loan to purchase a new house.
Basically the main points of the new FHA short sale guidelines are if a borrower has been current on their mortgage and other installment debts (such as auto loans, student loans, etc…) for the last 12 months prior to the short sale, they may be eligible for a new FHA loan immediately on a new primary residence they want to buy after their current house is sold on a short sale.
However is a borrower has been in default on their mortgage or other installment debts in the 12 months leading up to the short sale, they will have to wait three years from the date the short sale closes before they will be eligible for a new FHA loan.
So if you are thinking of doing a short sale on your current primary residence and you want to buy a house again without waiting three years, the key point is you can’t have any late payments on your mortgage or other loans for 12 months leading up to the short sale. Of course the challenging aspect here is that many lien holders will not consider doing a short sale for borrowers unless they are in default. But if you want to buy another home in the next three years and get a mortgage on it, you may want to speak to your lender and see if they will consider a short sale even if you are not late on the mortgage.
Of course these rules are the guidelines that came out of the Dept of Housing and Urban Development. The lenders that actually fund the FHA loans can create their own “overlays” to these guidelines. So it is ultimately up to how the lenders will interpret these new rules.
Here are some general highlights of FHA loans:
- Only 3.5% required for FHA loan down payment (vs. 10% down in most cases on conventional loans in California)
- Maximum FHA loan up to $729,750 in many counties of California and other expensive states
- FHA loan interest rates at historic lows (the U.S. Government is currently buying Mortgage backed securities at an unprecedented rate artificially holding down interest rates…this will not last that much longer)
- Seller can credit up to 6% of the purchase price for FHA loan closing costs
- FHA streamline refinance to lower rate options available once you have an FHA loan
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and FHA specialist)
858-922-7899
Qualify for FHA Loan for Self-Employed or Independant Contractors
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