After a Short Sale, Will I Ever Be Able to Buy a Home Again?

By
Real Estate Agent with RE/MAX Haven - Northeast Ohio Real Estate Specialist
http://actvra.in/4lg5

1850 Mara Circle Streetsboro

"Will I ever be able to buy a home again?"

Today I received another call from another homeowner in foreclosure. Burning questions that no one could (or would) answer were pouring out like lava, pent up emotions were finally being released in a meltdown of fear, frustration, sorrow, confusion, anger.

I just listened, acknowledged, and took notes, listening to learn if I would be able to help.

Eventually, in sharing with me, there was some relief from the pressure, and the courage to ask a question about the future arose: "Will I ever be able to buy a home again?"

Yes! As long as you can financially afford it with a steady source of income and a downpayment, YES. You will be able to buy another house in the future. Usually in about two years after a short sale, you will be eligible to purchase a home and get a loan.

If you opt for foreclosure, it will be seven years, but you will still be able to buy another home in the future, based on standards of the lending community as we know it.

A short sale will give the fastest return to loan eligibility. But even a foreclosure does not mean you will never be able to buy a home again.

The future looks better in time. Here's to your future homeownership and to your financial rescue today.

If you feel you have nowhere to turn for answers to your questions about short sales, loan modification and foreclosure, please call. I can point you in the right direction.

Posted by

Dawn Maloney, REALTOR®, Member of The Institute for Luxury Home Marketing
RE/MAX Haven Realty

Best Listings from Dawn Maloney, REMAX Haven Realty    Direct:  (330) 990-4236         Email: dawn@dawnsold.com

"Distinguished by Service" Helping home buyers and sellers in Summit, Portage, Stark, Medina, Wayne, Lake, Geauga and Cuyahoga Counties since 2003. Dawn Maloney, REALTOR® | RE/MAX HAVEN| (330) 990-4236 | All content ©2006-2014 by Dawn Maloney, REALTOR® unless otherwise noted.

Disclaimer: Information contained in this post is deemed reliable on the date of publication, but it is not guaranteed and it is subject to change without notice.

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Tim Bradford 10/10/2009 06:35 PM
Topic:
ActiveRain Community
Location:
Ohio
Groups:
Ohio Active Rainers
Realtors®
Short Sale REALTORS®
Short Sales and Forclosures ONLY
Short Sales Specialists
Tags:
short sale
ohio short sales

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Rainmaker
468,836
Janice Roosevelt
Rory Burkhart Team, Keller Williams - West Chester, PA
OICP ABR, ePRO,Ecobroker
Very timley and informative post. Thanks.
Oct 07, 2009 06:31 AM #1
Rainmaker
342,408
Dawn Maloney
RE/MAX Haven - Northeast Ohio Real Estate Specialist - Hudson, OH
330-990-4236 Hudson Stow Cuyahoga Falls Silver Lak
Thank you Janice! It is a desperate feeling not to have answers. But the answers are available.
Oct 07, 2009 06:33 AM #2
Rainer
51,227
Cynthia White
Serving Brevard Realty ( Brevard County) - Palm Bay, FL
I'm hearing that they can buy maybe in less than two years?
Oct 07, 2009 06:34 AM #3
Ambassador
1,820,299
Cindy Jones
Integrity Real Estate Group - Woodbridge, VA
Pentagon, Fort Belvoir & Quantico Real Estate News
I suspect when all of this mess sorts itself out the timelines for when a buyer who previously had a short sale, bankruptcy and foreclosure is going to shrink.
Oct 07, 2009 06:46 AM #4
Rainmaker
342,408
Dawn Maloney
RE/MAX Haven - Northeast Ohio Real Estate Specialist - Hudson, OH
330-990-4236 Hudson Stow Cuyahoga Falls Silver Lak
Cynthia, I have heard that too, but I would rather give the standard timeline than the exception. Two years is not that long in the grand scope of things.
Oct 07, 2009 06:57 AM #5
Rainmaker
146,482
Caren Wallace
Premier Property Group LLC - Tualatin, OR
Portland Caren Real Estate
Dawn, I think you have given great advice here! The short sale process is grueling but it will leave the owner in much better shape than a foreclosure~
Oct 07, 2009 06:58 AM #6
Rainmaker
342,408
Dawn Maloney
RE/MAX Haven - Northeast Ohio Real Estate Specialist - Hudson, OH
330-990-4236 Hudson Stow Cuyahoga Falls Silver Lak
Cindy, I hope you are correct. Otherwise, there will be an atrociously diminished pool of potential buyers.
Oct 07, 2009 06:59 AM #7
Rainmaker
342,408
Dawn Maloney
RE/MAX Haven - Northeast Ohio Real Estate Specialist - Hudson, OH
330-990-4236 Hudson Stow Cuyahoga Falls Silver Lak
Caren, you are right. A short sale does leave the homeowner in much better shape than foreclosure as a rule. And as for it being grueling, it isn't quite that bad with good guidance and knowledge of the procedure. The worst part is probably waiting for final approval, which can take months and some frustrations along the way, but it's definitely worth it to avoid foreclosure.
Oct 07, 2009 07:02 AM #8
Rainmaker
481,100
Barb Szabo, CRS
RE/MAX Trinity Brecksville Ohio - Cleveland, OH
E-pro Realtor, Cleveland Ohio Homes

Beautifully written Dawn, full of hope for the future for those facing the loss of their homes.

Oct 07, 2009 07:45 AM #9
Rainer
156,547
Tom Boos
Sine & Monaghan Realtors, Real Living - Grosse Pointe Farms, MI

Good information to pass on to our nervous "short sale" sellers.  There is obviously a very compelling reason to do a short sale rather than allow the home to be foreclosed.

Oct 07, 2009 08:14 AM #10
Rainmaker
342,408
Dawn Maloney
RE/MAX Haven - Northeast Ohio Real Estate Specialist - Hudson, OH
330-990-4236 Hudson Stow Cuyahoga Falls Silver Lak

Barb, thank you. Sellers have gut-wrenching questions. It's hard enough to be in a position where one has to ask...then when no answers are available, it's terribly disturbing.

Oct 07, 2009 08:31 AM #11
Rainmaker
342,408
Dawn Maloney
RE/MAX Haven - Northeast Ohio Real Estate Specialist - Hudson, OH
330-990-4236 Hudson Stow Cuyahoga Falls Silver Lak

Tom, it's true. Short sale is not an easy decision, but it's much better than the alternatives.

Oct 07, 2009 08:32 AM #12
Rainer
43,914
Lisa Matykiewicz
United Brokers Group - Gilbert, AZ

It is very scary for many homeowners!  It actually feels pretty good to be able to help people when they need it the most.  Good for you!

Oct 07, 2009 10:59 AM #13
Rainmaker
342,408
Dawn Maloney
RE/MAX Haven - Northeast Ohio Real Estate Specialist - Hudson, OH
330-990-4236 Hudson Stow Cuyahoga Falls Silver Lak

Lisa, it is scary. And even more scary than it needs to be if answers are impossible to find. You are right - it does feel good to help people when they need it most.

Oct 07, 2009 11:12 AM #14
Rainer
7,701
Walter Getz
1st Choice Mortgage Resolutions - Rochester, NY

Being in the mortgage industry as long as I have, and knowing what I know about credit (and that's alot! :P), I can only say that 2 years really is a BEST case scenario.

In all actuality, It may be 3 or More years until they "qualify" for a new home loan. Here's why:

Credit industry practices treat a home as "in foreclosure" the minute it is reported on your credit file that you are 120days past due. Generally speaking, our home payment ineptitude is not considered after 24 months of "on time" payments. Except, when it comes to foreclosure reporting. It matters not that the credit report will show the debt paid in full, or settled as agreed. What matters is that 120+ days showing up on that report. Many lenders will expect THAT kind of default to be coupled w/ on time payments of 36 months or MORE (As we see lenders hunkering down even more, I'll be that will go even higher soon)!

In addition, there is something else to consider that may delay the process even further. Those "on time" payments have to be made for 24 months. Should your seller move into a home with family, and not document rent being paid on a monthly basis on the same day each month, they have no proof of payment. Additionally, should they fall behind for any reason during that time, they will still need to show they've made payments on time.

Understand that I am NOT trying to negate that they cannot purchase a home down the road, only that a good solid timeframe should be shared. Many will work hard to accomplish that goal, and disappointments will abound when they cannot get that mortgage on that "New Leaf" property after 2 years.....

To be safe, counting time to correct credit issues, catch up on other bills, and time for negatives to ease off, I would say it's your best bet to advise your clients that 36 months would be a more apt minimum before they begin looking for that new mortgage :)

Of course...if they win the lottery (and hopefully they are sharing!) they can puchase a home for cash any time they want :P

Hope this was helpful!

 

 

Oct 07, 2009 11:54 PM #15
Rainmaker
211,957
Tim Bradford
American Midwest Mortgage - Cleveland, OH
NMLS 250013

Dawn,   As others have said your post it timely and excellently written.  As you said the guidelines presently call for 2 years after Completion date. (no exception per present FNMA guidelines)  If a seller is in the position where a mortgage modification that is acceptable to the lender and affordable to the seller it should be considered.  This can be a good option for the Lender, the owner and the real estate market if the modification works.  However, I hear modifications generally just forestall the inevitable.  The owners/sellers have very difficult decisions to make, but they need to understand it is better for them to make the decisions than to make the lender make the decisions. 

Hopefully your post will seller facing a difficult decision will contact a professional that understands the options and is willing to work with them. 

It should also be noted that I have seen some sellers, realtors and lenders try to coordinate a short sale closing with the purchase of a new property.  Unless full and complete disclosure is made to the old lender, new lender, realtors and underwriters, this can create legal problems. 

Oct 10, 2009 06:01 PM #16
Rainer
189,984
Thomas McCombs
Century 21 HomeStar - Akron, OH

As you have noted above, the normal guidelines may not apply in some of these cases. Think for a moment: if you, as a Realtor or a loan officer have a buyer/borrower prospect who has a recent foreclosure on his record but can show that all of his other bills and obligations have been paid timely, can provide a good story as to why the foreclosure happened, and can otherwise meet the underwriting requirements, are you not going to move heaven and earth to get this deal done?

Lenders who insist on the "normal" guidlines will miss out on many good loans. I don't believe that they will pass up very many good loans.

And then, there is always the seller assisted loan scenario. Remember the '80's? At that time due to high interest rates there were a very large number of seller carryback mortgages. And that worked out pretty well as I recall.  There is always more than one way to skin a  . . . .  lender.

"This is a great time to buy a house"

Akron, Ohio

 

Oct 19, 2009 10:37 AM #17
Rainmaker
211,957
Tim Bradford
American Midwest Mortgage - Cleveland, OH
NMLS 250013

Dawwn, I hope you do not mind me addressing comment #17 by Thomas.  

Thomas, How do you propose that lenders will "MOVE HEAVEN AND EARTH TO GET THIS DEAL DONE".   I Know a Lender, Realtors, Title Company, Seller that are being investigated, because the Seller purchased a new property, while at the same time negotiating a Short Sale on their current home. 

Oct 19, 2009 11:20 AM #18
Rainer
189,984
Thomas McCombs
Century 21 HomeStar - Akron, OH

Tim: I, for one, would be interested in the results of these kinds of investigations (see comment #18 above). This is apparently a fairly widespread practice in some parts of the country. I am not aware of anyone actually being charged with anything yet.

"This is a great time to buy a home".

Akron, Ohio

Oct 20, 2009 08:48 AM #19
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Dawn Maloney

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