Did you have to sell a home in the past as a short sale, and now feel that you are going to have problems getting your next mortgage? While it won't be easy to do, it's still possible that you could get a mortgage with that short sale on your credit history. Here are some thing you should consider when doing so.
Know The Waiting Period
There are many factors at play that contribute to how long you must wait when getting your next mortgage. This includes if you defaulted on your loan prior to selling it, the credit scores of those that are signing for the loan, and what kind of home loan you're looking to get next. On average, expect it to take between 2-7 years until you're able to get your next mortgage.
There will be exceptions to the rules though. For instance, an FHA loan won't have any waiting period, but only if you were not late on all your mortgage during the last year that you had the loan. Since loans typically default before short sales, it may be difficult to meet this requirement. Thankfully, it still allows those people who had to sell their home in horrible market conditions to get another loan.
Fix Your Credit History
Short sales can have a big impact on credit scores, but will make less of an impact when compared to foreclosures. Thankfully, the waiting period gives you time to fix your credit history so that you look more appealing to another lender.
Credit utilization is one way to do it. Still use your credit cards, but keep the balance low instead of approaching the card limit. This shows that you are responsible with credit that you are given. You'll also want to pay off balances in full so that you are demonstrating that you are not spending above your means.
Monitor Your Credit History
Don't assume that your credit history will work itself out. A common problem is that short sales can be mistakenly listed as foreclosures on credit reports. If you do not catch this, you'll run into issues when you go to get your next mortgage, which could delay or cancel the purchase of a home.
For more advice about dealing with a short sale when getting a mortgage, be sure to discuss it with your mortgage lender. They can help give you tips to make the transaction go smoothly.
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