Monday, May 16, 2011

How to Get a Mortgage after a Foreclosure or Short Sale

The guidelines for new mortgages are changing. Everything we take for granted about home loans (and being a home owner) is being debated now in Washington D.C.

Its clear that required mortgage down payments will increase along with other key elements that many of us have taken for granted. For example, there is growing support to eliminate the mortgage interest tax deduction. There are also political rumblings behind getting rid of the ‘As American As Apple Pie’ 30 year mortgage and replacing it with a 15 or 20 year term.

The Real Estate Insider News is reporting that a new approved guideline, the new QRM (Qualified Residential Mortgage) rules will be in full effect April 2012. (Its widely believed that the QRM rules will force minium down payments to increase to 20%). As Fannie and Freddie are ‘scaled down’ and their continued roles in the mortgage markets are in flux expect lots of heated debate about mortgage requirements. Stay tuned and be vigilant.
The question remains, given today’s guidelines what are the absolute bare-minimums to obtain a mortgage?
….and perhaps more interesting…how to obtain a mortgage immediately after a Short Sale. The answer is still the ever popular FHA. Here are the main requirements:

1) 3.5 percent down payment, based on the purchase price of the home (e.g., $7,000 on a $200,000 home), or a gift of that same amount;
2) 3 percent to 6 percent of the purchase price, on top of the down payment, for closing costs, or a credit from the seller of the same amount; and
3) 640 FICO credit score —
Lenders will want you to document income, asset and job history documentation, current paycheck stubs, two months’ bank statements and two years of W-2 forms or tax returns, and:
a minimum of two years have passed since the discharge of a bankruptcy;
a minimum of three years have passed since a foreclosure;
anywhere from zero to three years have passed since a short sale, depending on the circumstances surrounding the short sale.


  1. Thank you so much for this invaluable information. It's always tricky learning how to get a mortgage, but it's a very beneficial thing to do. At least I think so. It can really change your life for the better. So thank you very much for spreading the word. I know you wrote this a while ago, is it still the same?

  2. Getting a mortgage after a foreclosure ain't easy. But there are news few days back that people who have been mistakenly file their properties for foreclosure from banks will be receiving around $125,000 in return to this mistakes. Hopefully it might really aid those people who have been mistakenly hit by it.real estate license california

  3. Anonymous8:38 AM

    Admiring the persistence you put into your blog and in depth information you offer.
    It's great to come across a blog every once in a while that isn't the same
    unwanted rehashed material. Wonderful read! I've bookmarked your site and I'm including
    your RSS feeds to my Google account.
    Review my web site ;

  4. Anonymous5:08 AM

    I am extremely inspired along with your writing skills as smartly as
    with the layout in your weblog. Is that this a paid subject matter or
    did you modify it yourself? Either way keep up the
    nice quality writing, it is rare to peer a nice blog like this one today.

    My web-site :: Rachel Jones