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Government-backed FHA loans don’t rely on credit scores as heavily as conventional loans. If you participated in a short sale in the recent past and want a new mortgage, you will now be able to apply for an FHA loan a day after the short sale at the prevailing rate of interest provided your mortgage payments were current when you sold your home short. If you were in default at the time of the short sale, the U.S. Department of Housing and Urban Development states that you must wait three years after the sale before you can qualify for an FHA mortgage loan.
The damage a short sale does to your credit score is only temporary. Recent entries influence your credit to a greater degree than older entries. The more time that passes, the less your short sale will negatively impact your score, until it finally disappears from your credit report altogether. Keeping your debts low and making timely payments to your existing creditors helps your credit score recover more rapidly, leaving you better equipped to purchase a new home sooner.
Your credit score has a considerable impact on your ability to obtain new home financing. “The Washington Post” reports that your FICO score suffers to a similar degree with a short sale as with a foreclosure. The derogatory information will continue to appear on your credit record for seven years. The more mortgage payments you missed prior to the short sale, the greater the damage to your credit and the lower your chances of getting a new mortgage in the near future.
For more information, please contact Ron Hamaty