Can I refinance a rental property after a primary residence short sale?

I divorced this Spring (thank Heavens!) and closed on the short sale of our former primary residence last week. Am I currently eligible to refinance my Florida Fannie Mae owned rental property mortgage? I have 700 scores and no late payments on this property. Thanks!

Are you having trouble with making the mortgage payments on the investment home? If a refinance is not an option you may want to try to modify the loan. Even if you are not behind on mortgage payments yet, but you can show a just cause that you will in the near future default on the loan, your lender may work with you.

- Justin R. - Oct 1, 2013 at 11:42AM
3 Answers

The short sale will lower your credit scores considerably as soon as it hits your credit report. It won't be 700 for long. It is exceptionally doubtful any lender will refinance an investment property after the short sale of a primary residence, divorce or not.

When you have a short sale, regardless of whether it is on a different property or not, a waiting period applies.

According to conventional guidelines, you'll have to wait 2-7 years to be considered for a refinance.

2 years if you have at least 20% equity in the subject property 4 years if you have at least 10% equity in the subject property 7 years if you have less than 10% equity in the subject property

You may be able to get a non-conforming or portfolio loan prior to that, however, the rate would probably be so high that it wouldn't make sense to refinance what you have now.

Best of luck!

Here is what my latest research has revealed:

The latest Fannie Mae guidelines state that after a short sale, there is a mandatory waiting period of two years for a loan with an 80% maximum LTV (loan-to-value ratio), or four years for a loan with a 90% LTV.

FHA requires borrowers who weren't paying their mortgage when they sold their house to wait three years before they can qualify for a home loan. That time penalty may be waived in certain cases, including long-term job loss. There is no FHA time penalty for homeowners who made their house payments in the 12 months before their short sale. The size of a down payment can also shorten the waiting period.

The USDA loan program is a popular option for people who have had a short sale or foreclosure in their past because it is one of the mortgage programs with the shortest waiting periods and most flexible underwriting guidelines. The waiting period for a USDA loan after a short sale can be as little as 2 months in the right situation.