Buy After Foreclosure or Short Sale

By Andrew Robb

The housing market slump has left many owners without options other than renting. Perhaps you have had to short sale your home or you’ve been foreclosed on your home you thought you could afford or refinance if there was a financial emergency, but when the housing market crashed about 50% since the peak, you were left with no equity (value of home minus mortgage balance).

All is not lost and you can get yourself back on track for purchasing another home in the near future. Many lending institutions will give you a loan even if your FICO credit score is under 600, however the down payment requirement is quite substantial (up to 35%) and interest rates will be higher. To qualify for a mortgage after a short sale or foreclosure, most lenders like to see a FICO score of about 620. Use this helpful table to find out how long you must wait after a short sale, foreclosure or bankruptcy before you can qualify for another mortgage.

How long must a buyer wait after a bankruptcy, short sale or foreclosure before they can get mortgage financing?

If applying for an FHA loan

 Short sale or foreclosure: 3 years from date of sale (completion)
Chapter 7 bankruptcy: 2 years from discharge date
Chapter 13 bankruptcy: 1 year of the payout must elapse and payment information must be satisfactory; also requires permission of Bankruptcy Trustee

If applying for a VA loan

 Short sale: no waiting period is required if Automated Underwriting Approval is obtained
Foreclosure: 2 years from date of sale (completion)
Chapter 7 bankruptcy: 2 years from discharge date
Chapter 13 bankruptcy: 1 year of the payout must elapse and payment information must be satisfactory; also requires permission of Bankruptcy Trustee

If applying for a conventional loan

 Short sale: 2 years from date of sale (completion) with maximum financing of 80%; 4 years from date of sale (completion) with maximum financing of 90%
Foreclosure: 7 years from date of sale (completion)
Chapter 7 bankruptcy: 4 years from discharge date
Chapter 13 bankruptcy: 2 years from discharge date or 4 years from dismissal date

To boost your chances of obtaining a mortgage again, there are a few things you can do:

· Take out a major credit card. This isn’t as hard as one would think because creditors know you can’t file bankruptcy again for at least 7 years and you no longer have any debt.
· Stay at your current job for at least another year or two.
· Save up a down payment of 10 to 15%.
· Do everything you can to pay your existing bills on time, every time.

My name is Scott Grebner and I have been helping my clients realize their own personal real estate dreams. Real estate is a relationship-based business that works best when client relationships are built on trust and confidence. My goal is having clients be completely satisfied with the professional and caring service they have received.

The role of technology is rapidly changing how the real-estate market functions in this country today. Gerharter Realtors is embracing these new mediums of communication to better serve our customers. We have created our e-family to better place important information in your hands to help you with your housing needs. As a part of Gerharter Enterprises we have access to a broader range of additional services and resources to better assist you. Visit me at my Web Site, Blog, Facebook, Twitter, You Tube or Pinterest. Please check out our helpful resources on Sellers Tips, Buyers Tips, Foreclosure Tips, and Mortgage Tips. For a personal consultation please visit our Office.

It seems that the dream of past generations was to pay off a mortgage. The dream of today’s young families is to get one. I would love to hear from you, about your Real Estate Dreams and questions.

Email me at scott@gerharterrealtors.com.