There is some good news for those homeowners who have done a short sale.

On April 14th of this year Fannie Mae has announced that they are relaxing their guidelines for loan qualifications for those people who have sold their homes in a short sale.  With the rules as they are currently, it would take about 4 to 5 years on order to qualify for new home financing. However, beginning July 1, 2010 the new guidelines will permit only 2 years prior to a borrower being able to finance a new home.  The hope is that this will be incentive for borrowers to find an alternative to foreclosure which is so expensive for the lender.

The Prerequisites
In order to qualify under these new guidelines the borrower must have a minimum of a 20% down payment.  Without it they would have to wait the 4 to 5 years, the same as the ole guideline rules, unless they can document that the mortgage problems were the result of circumstances that were beyond their control. If these borrowers demonstrate that things such as loss of employment, divorce, or medical expenses resulted in financial problems they might be able to qualify with only 10% down.

The borrower will also have reestablish credit through traditional sources. Nontraditional credit like utilities, phone bill, and rent that aren’t reported won’t be considered.

The Bottom Line
If a homeowner can reestablish credit and save enough for a down payment it will take a significant amount of time prior to being able to purchase another home. During these stressful times the last thing a homeowner is thinking about is maintaining good paperwork about their short sale. However, it is very beneficial to keep detailed documentation with regard to any extenuating circumstances that the homeowner faced during the short sale. It might even be the difference of 2 to 3 additional years. Prior to entering into a short sale, the homeowner should consult with a short sale specialist.