Financing new home after short sale

[Greg Keeley]

I completed my short sale May 9th 2013.  I missed the final 3 payments on the old loan in order for the bank to approve the sale.  Fast forward to today, I currently own a townhouse with owner financing in place (since March 9 2013).  My credit score is 760, I have a pile of cash and I am ready to buy a new house and use the current townhouse as a rental.  I am unable to get any sort of financing from a bank/credit union for the new house.  

I owe 47,000 on the current townhouse and I believe it is worth 70-75k.  The house I am looking at, I would offer 120k.  I have about 80k in cash in the bank, so paying cash isn't an option on this one.  

I guess my question is, what other options would I have in order to buy this property?  

[Darren Eady]

It's a tougher situation than most people would think.  You can't qualify at the bank and you can't get private money and live in the home, because regulations are keeping HMLs away from lending to owner occupants.  I would try local banks, who hold their own paper for a year, before you give up entirely on a conventional solution.  They may look past your short sale.  Also, Fannie and Freddie lenders are completely devoid of common sense underwriting.  Locally, I know I could get this done for you with a really good "special circumstance" letter.  Good luck!