Options after short sale or foreclosure

The lingering economic recession and the housing crash left millions of Americans and hundreds of thousands of Nevadans with the tough decision of whether to walk away from their homes. For those who did, the short sale or foreclosure now prevents them from purchasing another home with a traditional form of financing for years to come.

“For those who do not want to be renters and who want to get back into the housing market while home prices are still affordable, you need to understand your purchase options. Now there are many options in purchasing a home after a short sale or foreclosure, ranging from traditional loan with a wait time to private lending with no wait time at all,” said Rick Piette of Premier Mortgage Lending, a full-service lender based in Southern Nevada.

According to Piette, traditional financing provides two options:

Government-insured loans, which include Veterans Affairs loans and Federal Housing Administration loans; and conventional loans that are comprised of two major groups — the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. The wait times for loan eligibility after a short sale or foreclosure vary among each entity.

“The shortest waiting time is a VA loan. If you’re eligible for VA financing, you may be eligible to purchase a home two years after your previous home is transferred out of your name,” Piette said.

“The next shortest waiting time is with an FHA loan. You may be eligible to qualify for an FHA loan three years after your previous home is transferred out of your name, but remember that in Clark County the maximum FHA loan amount is currently $287,500.”

A change in conventional financing guidelines that occurred in August has doubled the “wait time” to qualify for a conventional mortgage among those who experienced a short sale.

“In August, FNMA, the largest issuer of conventional loans, upped their waiting time after a short sale to four years from the prior waiting period of two years, but with a 20 percent minimum down payment,” Piette said. “The good news is that under the new guidelines a homebuyer who has experienced a short sale may now put as little as a 5 percent down payment to purchase a home, whereas the prior guidelines had a seven-year waiting period to qualify for 95 percent financing.”

The FNMA and FHLMC rules for those who experienced a foreclosure remain unchanged with a seven-year waiting period. The FHLMC also requires a seven-year wait after a short sale.

“If you do not want to wait the required time frames that traditional loans require, you may want to consider nontraditional financing options called ‘private money loans,’” Piette said, adding that Premier Mortgage Lending offers private and conventional loans.

Private loans require a minimum 20 percent to 25 percent down payment, and typically offer higher rates and fees than traditional loans, he said.

For additional information, call 702-485-6600 or visit www.AnotherChanceNevada.com.

Premier Mortgage Lending, NMLS No. 393282, is at 701 N. Green Valley Pkwy., Suite 125 in Henderson.