How Soon Can You Buy a Home After a Going Through a Short Sale?

There used to be a time when no one had heard of the term "short sale," much less sold a home that way. Now, with the housing crisis dragging on for years, and the economy sluggish, it's almost a household term.

Times have changed, and thousands of homeowners have sold their home via a short sale. As a result, people want to know how soon they can buy a home after a short sale, because their lives are financially sound again and they want to take advantage of presently low prices.

There continues to be a lot of misinformation and misunderstandings about the implications of selling your home via short sale, but the answer in a nutshell is pretty simple: You can buy a home again generally two years after short selling your previous home. Circumstances vary, and there is not a hard and fast rule, but it is possible legally to do so.

In order to have the best chance of buying a home again after two years have passed from your short sale, you need to follow some very simple tips to getting your credit back in shape.

First, make sure your credit report says the mortgage on your short sale was "Satisfied." Technically, it was, even if they took less than the amount of the loan, because they agreed to do so. They could have said 'no' and foreclosed on you.

Second, make sure you make every payment on time without fail. Whatever credit cards you have, pay them religiously (and pay them off ASAP!).

Third, make sure your debt to credit limit ratio on any given credit line, and on all credit lines combined, is less than 50%. This shows you are a good credit risk and do not overextend yourself.

Fourth, maintain at least three trade lines of credit. A trade line is a category of credit, like a car payment vs. a credit card vs. a cell phone. Mobile phone accounts are valid trade lines, as are school loans, and any consumer debt. You should exhibit a balance between opening and maintaining credit accounts and paying them off so you don't become overburdened with debt.

And fifth, check your credit score long before you apply for a mortgage so you can find any inaccuracies and get them straightened out. You don't need to use expensive "credit repair" schemes. Just get your finances in order and keep them that way and your credit score will reflect your credit worthiness.

Kevin Harper is an author with over 3600 subscribers to his Real Estate Marketing Tips newsletter. He is a consultant specializing in real estate subjects such as Portland real estate and other real estate topics. He is an SEO coach, helping real estate and small business clients succeed.

Kevin can be reached at 208-249-8893.