How long do you need to wait before you can purchase another home after a short sale or foreclosure?
Depending upon who is asked, the answer may vary: One day, one year, two or three years, or longer. All are technically correct as the answer depends upon individual circumstances and the specific lending program.
“There is conflicting information out there about how long you must wait before purchasing a home after a short sale or foreclosure that it can be confusing, especially because this information changes as new lending programs are introduced,” said Rick Piette of Premier Mortgage Lending, a full-service lender based in Las Vegas that serves Southern Nevada and the Reno-Sparks area.
According to Piette, the confusion has been caused because some new lending programs bypass the government-sponsored enterprises standards of at least a two- or three-year wait after a short sale and longer after a foreclosure.
“The fact is that thousands of Nevadans now have a choice and no longer have to wait a minimum of two or three years after a short sale. You can choose a lending program that follows the GSE guidelines of a two- or three-year wait, which in reality is often longer because this benchmark is for people with near-perfect credit during those three years,” Piette said.
“However, there are other lending programs that significantly shorten this wait period. In August, the Federal Housing Administration announced the new Back to Work mortgage program that can reduce this wait to a year. A more established program that offers an even shorter wait period is Another Chance Nevada, which Premier Mortgage Lending introduced two years ago and reduces the wait after a short sale or foreclosure to as little as a day.”
According to Piette, FHA’s Back to Work — Extenuating Circumstances program is designed for those whose short sale or foreclosure was a result of a financial hardship such as a 20 percent loss of income or loss of a employment, and this “economic event must be proved.”
“The new Back to Work program will reopen the doors to homeownership for thousands who lost their home due to the recession and have since recovered from that economic event. In this program you have to prove that an extenuating event was the cause of losing your home and that you’ve recovered from it by showing 12 months of timely payments. There are other requirements like meeting HUD requirements for an FHA-insured mortgage, which may make it difficult for some to actually participate,” Piette said.
“Another Chance Nevada can help the same group of displaced homeowners shorten their wait even more and offers guidelines that are clear and easy to understand. As a privately funded program, we do not have to follow GSE or (Housing and Urban Development Department) requirements and can take a more individualized approach in considering your personal situation.”
Another Chance Nevada is similar to conventional mortgages in that it follows full-documentation guidelines and offers fixed rates, but there are some differences:
• Loans are made by private and institutional portfolio lenders.
• The 15- and 30-year fixed-rate loans have interest rates that are typically higher than traditional mortgage rates.
• At least a 20 percent down payment is required. The down payment can come from personal funds or can be obtained as a gift from family members.
• Borrowers may close within 30 days from the time of loan approval.
• The loan may be refinanced at any time without penalty.
An Another Chance Nevada loan may be used on the purchase of a resale or a new home. The lender is working with Beazer Homes, D.R. Horton, Dunhill Homes, Harmony Homes, KB Home, Pardee Homes, Pulte Homes and Del Webb, Richmond American Homes, Ryland Homes and William Lyon Homes.
The first step in participating in Another Chance Nevada is to meet with a loan officer for complimentary prequalification. As a full-service lender, Premier Mortgage Lending can connect qualified applicants to conventional loan programs as well.
For additional information, call Premier Mortgage Lending at 702-485-6600 or visit www.AnotherChanceNevada.com.
Premier Mortgage Lending, NMLS No. 393282, is at 8689 W. Sahara Ave., Suite 100. It is a member of the Las Vegas and Boulder City chambers of commerce, Better Business Bureau and Southern Nevada Home Builders Association, as well as an affiliate member of the Greater Las Vegas Association of Realtors.