Translation:The short girl is waiting where you are waiting.
It's not merely better in this case, for either standard or colloquial native English - it would never be taught as an option. "The short girl is waiting where are you waiting" is distinctly foreign-influenced English and no native would phrase it that way - however living in San Francisco, we have many foreigners so I hear it often but it does not prevent most if anyone from understanding. I think this is interference from using a wh-word (in the subclause), for which language learners are taught in forming questions take a verb immediately after if. e.g. Where are you waiting? But this isn't a question, so no inversion takes place.
Fun fact: it's rather unlikely any Hungarian would repeat the verb. We were talking about waiting so it's assumed that the verb would be the same. I'm not sure any English speaker would say "The short girl is waiting where you." In the meantime, this feels an obvious and natural way in Hungarian.