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Question By
angieslade

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Will I be able to get a mortgage two years after a short sale with a credit score of 649
No late payments, no negative marks on my credit report in the last three years.
We were late prior to due to short sale and husbands illness

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You could get an FHA loan with 5% down if you can prove to them you had the short sale because of your husbands illness. The problem now is that the rules are changing on January 14th, 2014 that you will have to pay PMI for the life of the loan. Of course you could refinance when you have payed 20% of the house value, but who knows what the rates will be when that happens.

Otherwise, if you have enough to put 20% down, conventional mortgage lenders will probably accept your request, since it has been past the minimum two years.

Reply by
angieslade

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Thanks... we will be able to put 20% down if we go into our retirement fund. I'm just wondering if the interest rate will be horrible?  I can prove my husband was ill and forced to retire because of it.

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Reply by
Heymachine

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If you want the lowest rate, your best bet would be to stick to an FHA loan, but put 20% down.

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angieslade, seems there is a lot of bad info in the responses above (no offense to any of the responses).  Here is the info you need:

FHA requires 3 years from the date of Short-Sale (the date it transferred out of your name).  If you were current on the mortgage and all other debt for the 12 months BEFORE the short-sale, then you could qualify for an FHA loan immediately after the short-sale.  Based on your original post, it sounds like there were some credit issues (possibly late payments) leading up to the short-sale, so I assume that the credit wasn't clean for the 12 months before the short-sale.

In that case, you could look at the new FHA Back to Work program.  With this, you have to document that there was a 20% decline in income for a period of 6 months or more.  6 months before the short-sale, compared to the 6 months after the short-sale.  So far, I'm finding it very difficult to document everything on an FHA Back to Work program to meet lenders criteria.  Probably a long shot to be able to do that program.

Just to clear up some of the information already posted:

New FHA guidelines updating mortgage insurance guidelines changed on June 3, 2013.  Now, you pay MIP (FHA's version of PMI) for the entire loan term if you put down less than 10%.  If you put down 10% or more, then you pay the MIP for 11 years or until the loan is paid off, whichever is shorter.

Rates on FHA loans do not flucuate very much from lender to lender, based on credit scores.  Sure, someone with a 760 score would get a better rate than someone with a 620, but it wouldn't be much more than 0.50% or so.

There is no benefit to putting down 20% on an FHA loan, other than getting the shorter term on the MIP as discussed above.  You do not get a better rate, or better terms with the larger down payment.

Conventional (Fannie Mae or Freddie Mac) guidelines on Short-Sales or more restrictive than FHA.  Conventional looks at Short-Sales as pre-foreclosure sales, and require 2 years if you put down 20% or more, 4 years if you put down 10%-19.99%, and 7 years if you put down 5%.

Hope that info helps. 

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Why not keep renting and build your credit score, because if you can get a mortgage with your current score, the interest rate is going to be stupidly high.  Utilize the information and tools on this site to help you reach that goal.  That is what it's for.

Reply by
angieslade

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We are in our 60's and feel like we need a place to call our own.  I have been utilizing the site, that's why I was asking questions from fellow users of the site.

Thanks

Top Contributor
7351 Contributions
3807 People Helped

Why not keep renting and build your credit score, because if you can get a mortgage with your current score, the interest rate is going to be stupidly high.  Utilize the information and tools on this site to help you reach that goal.  That is what it's for.

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