How to Buy a House After a Short Sale
If you have a short sale on your credit report, buying a house can be both difficult as well as daunting. A history of having had a short sale creates several challenges for you, the first of which is that it severely affects your credit rating. The consequence of this is that you may have to wait a number of years before even considering buying a house.
A short sale is a real estate sale wherein the proceeds of the sale fall short of the sum of money owed on the house’s loan. A short sale usually happens when a borrower is unable to repay the mortgage on their house, and the lending institution decides to sell the house off at a moderate loss instead of pressing the borrower to no avail. The benefit of a short sale is that it avoids a foreclosure which is severely detrimental to both parties.
The first thing you should know is that you can actively pursue looking for a new house three years after the date of your previous house’s short sale. The exception to this rule is if you suffered any “documented extenuating circumstances” in the form of job loss, disability, or death. This can set you back by another year.
With this being said, you must ensure that you reestablish perfect credit in the intervening three years from the short sale of your property to the time when you are again eligible for buy a house. You must ensure that all your bills are paid on time. You must also check your credit scores regularly and ensure that you raise your credit score to above 650 at the very least.
Remember, the current credit environment is tough, and leaves no margin for error. Ensure that you have a stable employment situation. Study and evaluate what kind of house you can afford to buy. Save up enough money to be able to make a minimum of five percent down payment.
Ensure that you target houses whose mortgage will not be more than forty percent of your income. Factor in insurance and taxes into your calculations. Keep monitoring interest rates, and ensure that you start preparing at least six months prior to buying a house.
Keep all your short sale documents and paper work handy. Prepare a good explanatory letter detailing why you had to undergo a short sale. Ensure that you select a lender that does VA or FHA loans, as these programs give an excellent fixed low rate of interest even if you have had a 3 short sale three years ago. It is important that you are pre approved three months before buying a house.
Once you have done this ground work, go ahead and look for your new house. Once you find the right house for you and your family, ensure that you negotiate a good purchasing price. Provide the lender with all pertinent paper work such as your bank statements and current pay stubs.
Have the home inspection performed in your presence, and then go ahead and notify your friends, family, and creditors about your new address. Lastly, move in to your new home and enjoy it. Good luck.
You can get more information about Real Estate Company Canada by visiting Ontario Homes For Sale
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