Buying After a Short Sale

Steps To Buying After a Short Sale or Foreclosure

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In the last few years the Las Vegas Valley including Henderson, Las Vegas and North Las Vegas were hit hard by the recession. Many homeowners either had to short sale or foreclose on their property. Now that things are rebounding those homeowners are ready to buy again. According to RealtyTrac and the Las Vegas Review Journal there are 220,660 buyers returning to the Las Vegas, Henderson market alone to buy after a short -ale or foreclosure. . Good thing is you are not alone and because of this many mortgage companies and Fannie Mae/Freddie mac have come up with solutions to help you with home ownership again. I get calls about buying after a short sale or foreclosure everyday from past clients who we helped through either short sale or foreclosure. These are steps we give them to buying after a short sale or foreclosure.

Step 1 to buying after a short sale or foreclosure

Establish good credit history after the short sale or foreclosure. Pay bills on time for a consecutive year is very important before you can qualify for a new loan. Most lenders will also suggest to get some form of credit like a small limit credit card that you would pay off the balance every month.

Step 2 to buying after a short sale or foreclosure

Save for a down payment. Gone are the days of 100% financing. Depending on your situation and time frame from short sale or foreclosure the amount of down payment will differ. Down payments can range from 3.5% to upwards of 25%. I have even seen it as high as 50%. It all depends on your situation so typically most homeowners reentering the market are going to get a FHA loan with a 3.5% down payment. There is a loan limit on a FHA loan of $287,500 and you need to wait 3 years to purchase. If you are looking for a higher loan limit or shorter wait time then your options would be a conventional loan with the higher down payment and only a 2 year waiting period. VA buyers have a benefit they will usually be able to obtain a VA loan 2 years after a short sale with zero down payment.

Step 3 to buying after a short sale or foreclosure

I believe it is the most important step, speak with a licensed mortgage lender who will be able to look at your whole credit picture. We suggest this because many times the short sale or foreclosure was not the only ding on your credit. That is not true in all cases however it is always good to know where you stand with your credit and sometimes it can be better than you think. A lender will be able to pull your credit report and give you advice on how and what you need to take care of before you can qualify for a new mortgage. This is important because credit is an anomaly, what you would think you need to fix on your credit might not have as big of an impact as you think. A lender will be able to point out the right items to fix first. Note do not start looking at homes with your real estate agent until you obtain a loan pre approval letter. This will prevent you from getting disappointed if you need to wait longer before buying after a short sale or foreclosure. In most cases you will have to provide the lender with documentation of the extenuating circumstances behind the short sale or the foreclosure. So it is a good idea to have all short sale or foreclosure paperwork together to bring with you.

Step 4 to buying after a short sale or foreclosure

Research the date of when the clock should start ticking down for the waiting time frame to obtain a new loan. Many homeowners believe the date that they moved out of the property is the start date. The truth is until the property was out of your name the date doesn’t start. So in the case of a foreclosure the start date could be months or even years after you moved out of the property. That information can be found on the county recorders page or your real estate agent can look it up for you.

Step 5 to buying after a short sale or foreclosure

Start the home buying process. Sit down with your real estate agent to perform the buyers consultation. In the buyers consultation process your real estate agent will go over your needs analysis for your new home. In our experience a buyer reentering the real estate market has different priorities for the new home than they did on the previous home. The discussion is usually more about the finances and how to stay within budget. Such as how to negotiate closing costs and monthly mortgage payments. Another big trend that we have seen is many generations buying the home together. Many home builders in Henderson, Las Vegas and North Las Vegas are building multi-generational housing to meet this demand.

Ernie and Leah Gonzales also were hit by the recession as you can imagine most real estate were hit. When the Henderson, Las Vegas and North Las Vegas market was hit so hard Ernie and Leah decided that they wanted to help client’s short sale properties that they no longer could afford due to extenuating circumstances. Ernie and Leah dove in head first helping as many client’s as they could out from under an underwater property, client’s who were transferred, client’s with medical issues and client’s who lost their jobs and everything else in between. During this time Ernie and Leah even had to short sale themselves. We are not telling you this to feel sorry for us or to discount what others went through we are telling you this because we are working on the steps to buying after a short sale also.

Contact Ernie or Leah with questions on the steps to buying after a short sale or foreclosure [email protected] or 702-291-8126.

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