Last week I passed along a recent guideline update regarding FHA’s stance on allowing the financing of a new home purchase one day after closing a short sale that meets specific criteria.
This week, after prodding and communicating with FHA about several scenarios, we have some clarity about what is allowed and what is not going to be allowed.
As with all of these programs that seem too good to be true, you have to read the fine print.
I will spare you the “fine print” part and I am going to go one step further and let you know what they “really mean”:
If you sold your home because it was upside down – you have to wait 3 years to buy again.
Here are the highlights of the above referenced BMCD Mortgage Credit Analysis Handbook
So, what this is basically saying is that unless there is a death in the family or an extreme hardship like moving up or moving down for health or safety reasons – it’s going to be a fight to get approved to buy again.
Declining Market Not A Good Enough Reason
This rule was not created as a “loop hole” for folks that are stuck with more loan than they can handle right now.
This is a positive move toward being aware that there are scenarios where, in a normal market, a home owner would be basically “forced” to sell.
Examples that may fall into the Acceptable Reasons category:
- Living in previously owned bachelor pad condo – got married, have kids – 1 bed 1 bath doesn’t accomodate 3+ person family.
- Kids move out of home – parents no longer need 4 bed 3 bath home for 2 people.
- Relocating because of job
I know, this doesn’t leave a lot of wiggle room for what I know are legitimate reasons for being “forced” to move.
I do know that loss of job, loss of income, furloughs, laid off – or any other economy related challenges are not considered an acceptable reason for being excluded from the current published wait times before you buy again.
I am keeping a close eye on this and we are working on a couple right now. I will be sure to keep you updated or feel free to leave a comment below, call, text or email me with questions.