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Brian Mayer

USDA Loan After A Short Sale

Monday, January 2, 2012 - Article by: Brian Mayer - Equity Resources - Message

USDA Loans and VA Loans are the only two covered loans that currently allow you to almost immediately obtain a new mortgage after a short sale. This article is about USDA Loans and what the current guidelines are for purchasing with a Guaranteed USDA Loan after a short sale.

USDA Loan After A Short Sale

USDA does not have specific guidelines regarding a short sale however guaranteed loans must be obtained directly from a mortgage lender and their guidelines will specify a few things to be aware of.

  1. You can not have more than 1 late mortgage payment in the past 12 months. Since the vast majority of people have late payments leading up to a short sale this will require most people to wait one year after the short sale to re-apply. This is good news however considering FHA makes you wait 3 years and conventional can be up to 5 years depending on the circumstances.
  2. You need to have a minimum credit score for the lender. Most lenders have a 640 minimum credit score requirement. We can do 620 however you will need other compensating factors like cash reserves, strong employment history or some other strong reason for a lower score. This is the #1 factor most people face especially considering the lead up to the short sale will have multiple late payments on your credit report. Look into techniques for how to improve your credit score sooner rather than later.
  3. Make sure you will qualify for a USDA Loan. USDA Loans have income and location restrictions. Make sure you read up on the USDA Mortgage Guidelines and contact a USDA mortgage company to have a USDA loan specialist review your credit and current financial situation to develop the best plan for getting back into another home as quickly as possible.

Losing a home can be an extremely stressful situation. If your desire is to move back into a home with a mortgage as soon as possible, get informed. Knowing where you are, where you need to get to, and how to get there will provide hope and confidence for the future. Currently you can still get a USDA loan after a short sale however guidelines and lender overlays change often so stay in touch with your loan officer to stay on top of any changes.

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