Need to Sale, but Underwater?

With almost half of Colorado home owners underwater on their home there are a lot of people wondering what to do when they have to move? Bankruptcy? Foreclosure? Short Sale? Or do you keep the house and convert in to a rental?  None of the options are great, but what is the best of all evils?

There is no right answer for every one, however, more lenders are starting to allow clients to purchase a new house after a short sale is completed with NO seasoning requirements.   FHA announced this change in guidelines in December of 2009, however lenders still required applicants to wait 2-4 years after a short sale to be eligible for a new mortgage.  A majority of lenders still require borrowers to wait, but there are a few lenders that will now let you obtain a new mortgage immediately.

However, there are additional guidelines you must meet to qualify for a new mortgage without waiting at least two years.  If you are considering a short sale on your current house and purchasing a new home you must:

1. Have no delinquent mortgage payments in the last 12 months and your mortgage must be current at time of closing.
2. You can't have any delinquent payments on any installment debts in the last 12 months.
3. You can not complete a short sale just to take advantage of the market.  You need to be able to show that moving is necessary (increase or decrease in family size, moving to a different geographic area)

If you have any questions or are planning to do a short sale please call us for more information.