Austin Texas – The Stop Foreclosure Institute recently received a question from Jon. Here was his question:

“I experienced a financial hardship about two years ago and sold my house via a short sale. I am now back on my feet and want to purchase a home again. I have been paying my rent on time and my credit scores have quickly gone back to around 700 again. What programs or other options do I have in terms of buying another home now and getting a mortgage loan? I want to purchase a house for about $150,000 in North Austin. I would like to use an FHA loan if possible, since the down-payment is only 3.5%.”

Jon, we are happy to hear you are back on your feet, and that you’ve been able to get your credit scores and finances back in shape so fast. Based on what you have told me, you have three possible options currently:

Click here to discover how other sellers successfully did a short sale and avoided foreclosure.
1. Wait one more year to get an FHA loan. Your are only about 1 year away from the expiration of the 3 year FHA waiting period (post doing your short sale). Unless you have an urgent reason to buy now or have a lot of cash sitting around (see item 2 below), my advice is to wait the additional year out. In the meantime, make sure to pay ALL your bills on time and work with your mortgage officer to make sure all your other financial ducks are in a row so there are no surprises when your 3 year FHA waiting period is finally up.

2. Go get a Non-FHA loan. FHA is popular among buyers who only have enough cash to make the FHA minimum 3.5 percent down payment — but it’s not the only game in town. The vast majority of conventional loans (ie Non-FHA) available from mainstream lenders are insured by either Fannie Mae or Freddie Mac. Both of these U.S. government controlled agencies impose a shorter, two-year, post-short-sale waiting period (as long as the borrower is coming to the table with a 20 percent cash down payment). And if you wait an additional 2 years (ie a total of 4 years post short sale), the minimum down payment requirement comes down to 10 percent for Fannie and Freddie insured loans, but by then you would already qualify for the 3.5 percent down FHA mortgage as well.

3. Plead “extenuating circumstances” to FHA. FHA guidelines do make an exception for the 3 year, post-short-sale, waiting period for former homeowners who did a short sale. If you can document you were forced to do the short sale by “extenuating circumstances” you might be able to cut that 3 year wait short. The most common scenarios that fit the bill are a 1) job transfer to another area (not job loss) or 2) a natural disaster that affected the property (like fire, flood, etc.). Beyond that, whether a “hardship,” rises to the level of an “extenuating circumstance” for purposes of qualifying for an FHA loan before the 3 year waiting period is up, is up to the discretion of the underwriter and lender you are using to do your FHA loan. However things like a 1) job loss, 2) an interest rate adjustment on an ARM loan you had, or 3) the decline of the home’s market value, DO NOT count. If you had, say, an accident or illness that resulted in a temporary disability, it might be worth the effort to plead your case for that set of facts if you can document it fairly well. Speak with your mortgage professional about whether you can make a credible argument in favor of shortening your 3 year FHA waiting period based on this “extenuating circumstance” angle.

Thinking about a short sale?

I can help you short sale your property and get back on your feet. Send me an e-mail at GeorgeKiefer@gmail.com. I will contact you for a free consultation.

When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me at (512) 970-0709

Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.

Thinking about a loan modification? Our Austin loan modification kit has the instructions you will need to get a loan modification approved with your bank. Click here to request a copy.

Thanks for reading this, George Kiefer, GRI, CDPE.

George is a Real Estate Agent and Broker Associate at Keller Williams Realty in Austin, Texas. Austin Short Sales Realtor:

Phone: (512) 970-0709. GeorgeKiefer@gmail.com.

Assisting Homeowners in Distress

View My homes for sale at www.GeorgeKieferAustin.com.

George Kiefer specializes in loan modification assistance and short sales in Austin Texas. Austin Loan Modification Help, Austin Short Sales. Austin Short Sale Realtor Austin Texas Short Sales. Austin Realtor.

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Important Notice

George Kiefer, Keller Williams Realty, and the Stop Foreclosure Institute are not affiliated in any way, shape, or form with the government. Our services have not been reviewed or endorse by the government or your lender. Most lenders willingly work with agents on short sales. Why?

The views expressed here are George’s personal views and do not reflect the views of Keller Williams Realty.

This information on Austin Short Sale Question About Deficiencies is provided as a courtesy to our viewers to help them make informed decisions.