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 VA loans and FHA loans; and
- Conventional loans that comprise of two major groups – the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corp. (FHLMC).
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 a 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 you 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 home buyer 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 7-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 timeframes that traditional loans require, you may want to consider non-traditional financing options called ‘private money loans,’” Piette said, adding that Premier Mortgage Lending offers both private lending programs and conventional loans to qualified borrowers.
“In the private money arena, both private and institutional portfolio lenders offer 15- and 30-year financing options. This type of financing allows you to purchase another home as little as one day after your short sale or foreclosure is completed,” he said. “You are often required to place a minimum 20 percent to 25 percent down payment, and these loans typically offer higher rates and fees than traditional loans.”
Premier Mortgage Lending has provided private, “second chance financing” to hundreds of Las Vegas Valley residents since 2011 through its Another Chance Nevada home loan program.
“It feels great to turn renters back into homeowners. Our customers are ecstatic to get back into the market with a home of their own,” Piette said. “I believe today, as I did in 2010 when I devised this program, that getting people back into homes of their own is fundamental to economic recovery. So goes housing, so goes the economy.”
The first step to determining one’s mortgage options is to meet with a full-service lender and go through the mortgage prequalification process, which Premier Mortgage Lending offers at no cost.
For additional information or to schedule an appointment for mortgage prequalification or refinancing, call Premier Mortgage Lending at 702-485-6600 or visit www.AnotherChanceNevada.com.
Premier Mortgage Lending, NMLS #393282, is located at 701 N. Green Valley Pkwy., Suite 125, Henderson, 89074. The full-service lender is a member of the Las Vegas and Boulder City Chamber 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.