The downturn of the economy caused many homeowners to lose their homes through short sales, foreclosures, bankruptcies, or deeds in lieu. The looming question on many of their minds was when will I own again? How long do I have to wait to secure financing to buy a home again? According to a recent article published in the New York Times notes, “there are plenty of asterisks and conditions” when it comes to how long a borrower must wait after a “significant derogatory event,” like a foreclosure or short sale. I've listed a few helpful information regarding how long to wait after a foreclosure, short sale or bankruptcy, based on different mortgage issuing agencies.
Fannie Mae and Freddie Mac
Loans issued through Fannie Mae and Freddie Mac have a waiting period of three-years following a foreclosure. A buyer would wait two years if they had a short sale, deed in lieu, or discharge/dismissal of bankruptcy. If borrowers can justify the circumstance that caused the foreclosure or bankruptcy was a result of an illness or job loss — or other “extenuating circumstance” — this factor may help reduce the wait. However, if the buyer did not experience such extenuating circumstances, the former homeowners may have to wait longer, perhaps up to seven years following the foreclosure or four years after a bankruptcy.
Federal Housing Administration (FHA)
Loans that are insured by the FHA require buyers, even with perfect credit, to wait three years after a foreclosure and two years after a bankruptcy is discharged, according to The New York Times notes. Borrowers who chose to short sale their homes, will have to wait three years to secure another FHA loan. The New Time notes also stated that borrowers will have to wait three years if they were in default at the time of the short sale and had no extenuating circumstances. However, if the borrowers were on time with all their payments a year prior to the short sale, they may have no wait at all and might even qualify for an FHA loan immediately.
According to Andrew Wilson, a spokesman for Fannie Mae, “The key is to avoid the foreclosure.” “That is what will help you be eligible for the shorter period.”
Hope you find this helpful. Looking forward to helping you with your next real estate endeavor.
Gloria Walters | Tampa REALTOR
Bridging the Gap Between Buyers and Sellers
772-359-7543 (direct)
813-200-8708 (fax)
gwalters83@gmail.com
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