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Established Member
Pos7al
Posts: 24
Registered: ‎10-14-2010
0

Construction loan 2 years after Short Sale?

It has nearly been 2 years since my Short Sale (with delinquents) was completed.  My wife and I were looking at a new home purchase 8 months ago and was instructed that I would need to wait until that 2 year mark, as we could buy a home with a Condo still under our name and only my wife on the loan.

 

We just got our dream property on the water, paid cash, and are about to go after a construction loan.  The property itself is going to be about 30% of the loan value, and the appraised value of the home will most likely be 2.5x the loan amount. What we have;

 

- Wife's credit.... spotless.  It is in the 780 range b/c of new accounts and was previously at 805.

- My credit.... getting better.  When pulled before, middle score was about 685.  This was after the short sale.

- We have minimal debt on cards/record and nice income.

 

I know FHA and other lenders will put the 2 year mark on credit, but I would think with so much down that they would take certain circumstances into consideration. 

 

Any experience or thoughts on the matter would be appreciated.

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Senior Contributor
StartingOver10
Posts: 4,220
Registered: ‎03-06-2010
0

Re: Construction loan 2 years after Short Sale?


Pos7al wrote:

It has nearly been 2 years since my Short Sale (with delinquents) was completed.  My wife and I were looking at a new home purchase 8 months ago and was instructed that I would need to wait until that 2 year mark, as we could buy a home with a Condo still under our name and only my wife on the loan.

 

We just got our dream property on the water, paid cash, and are about to go after a construction loan.  The property itself is going to be about 30% of the loan value, and the appraised value of the home will most likely be 2.5x the loan amount. What we have;

 

- Wife's credit.... spotless.  It is in the 780 range b/c of new accounts and was previously at 805.

- My credit.... getting better.  When pulled before, middle score was about 685.  This was after the short sale.

- We have minimal debt on cards/record and nice income.

 

I know FHA and other lenders will put the 2 year mark on credit, but I would think with so much down that they would take certain circumstances into consideration. 

 

Any experience or thoughts on the matter would be appreciated.


Under the new FHA matrix for derogatory credit (short sale is considered derogatory), you can get a new mortgage 3 years from the date that the house closed and transferred from your name into the new buyers name.

 

OR, if you had NO LATE PAYMENTS on any mortgages or consumer debts for the 12 months leading up to your short sale AND the short sale was not taking advantage of market conditions, THEN there is no waiting period.  I'm not really sure how you would show that you weren't taking advantage of market conditions unless you were transferred by your job or something similar. Maybe an underwriter can jump in here and give details.

 

Conventional loans are longer.

USDA loans are more lenient.

 

 


 

Established Member
Pos7al
Posts: 24
Registered: ‎10-14-2010
0

Re: Construction loan 2 years after Short Sale?

I don't see how that is possible.   How can you have current payments up until a Short Sale?  My bank wouldn't listen to me while I was nearly screaming for help.... then when I got one delinquent they started to listen, but wouldn't pay real attention until it got late.

 

And our government is garbage in offering their home remods, leaving the people that actually needed it stranded.

 

No matter, though, as I was aware of that information (in recent searches) but didn't think they offered New Home Construction loans.

 

So, in regards to new construction.... any idea?

Frequent Contributor
CreditGuy03
Posts: 320
Registered: ‎08-13-2008
0

Re: Construction loan 2 years after Short Sale?

Id like to know this as well. If I was to get a construction loan by the time the house in finished and built(10 months ) it will be past the 3 year mark for me at the closing table. 

Community Leader
Senior Contributor
StartingOver10
Posts: 4,220
Registered: ‎03-06-2010
0

Re: Construction loan 2 years after Short Sale?

[ Edited ]

CreditGuy03 wrote:

Id like to know this as well. If I was to get a construction loan by the time the house in finished and built(10 months ) it will be past the 3 year mark for me at the closing table. 


The time period is measured from the short sale closing date to the new application date for the new loan, not the closing date of the new loan. It makes a difference between yes and no.


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