Almost every agent has been asked the question: How Long Do I Have To Wait To Buy A Home After Short Sale, Foreclosure or Bankruptcy?
The answer is…”It Depends”.
That’s because it varies with the type of loan you are trying to obtain, the factors leading up to the short sale, foreclosure or bankruptcy, and what has happened since the big event. And, if that is not complicated enough as it is, the rules change all the time as lenders review and update their criteria, so talk with your favorite lender or one of my favorite lenders noted below.
Currently, you can expect the following time tables for obtaining an FHA loan:
Chapter 7 Bankruptcy
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At least 2 years from discharge date.
Foreclosure.
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At least 3 years from completion date.
Short Sale
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There are no time restrictions if the borrower was current at the time of the short sale and all mortgage and installment payments were made within month due for the previous 12 month period prior to application date, and the proceeds from the short sale serve as payment in full.
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3 years from completion date if in default at time of short sale. Keep this in mind if your lender is telling you to stop paying so that you may qualify to get a loan modification. You probably won’t get the loan modification after all the hassle and now you will have to wait 3 years to qualify to buy a house.
I always suggest that you should talk with your lender at least a year or so before you are thinking about buying so that you have time to work on re-establishing your credit as well as working on improving your credit score so that you will qualify for the loan. Additionally, you should start saving for the down payment and closing costs. Plan on saving up about $5,000 plus a minimum of 3.5% of the purchase price of the home you want to buy. That should be enough to get you into an FHA loan.
If you don’t already have a preferred lender, I suggest that you talk to at least two lenders to get a feel for which one you are comfortable working with. Here are three suggestions to consider:
Frank Monaco at Guaranteed Rate Affinity. 916-478-9586 Frank.Monaco@Grarate.com
Laura Churchill at Guaranteed Rate. 916-549-6776 laura.churchill@@Grarate.com
Steve Germoles at Comstock Mortgage. 916-977-1232 sgermoles@comstockmortgage.com
Chris Opfer at EstaRMortgage. 916-709-3257 Chris.Opfer@EstaRM.info
Here are some things that you should know and consider:
1. In bankruptcy, the timelines start from “discharge” date NOT filing date. Short Sale and Foreclosure timelines start from the completion date.
2. Buyers should start the process of re-establishing credit and make sure their credit lines after the bankruptcy are current and any credit lines do not exceed 50% of the available credit being used. You may want to talk with Blue Water Credit for help with re-establishing your credit.
3. Buyers should also consider practicing being homebuyers. Work with your REALTOR and your lender and estimate what your monthly expenses will be with the purchase of a home. Next, place the difference between your current rent payment and the anticipated monthly cost of your home payment, taxes and insurance into a saving account. Do this for the year that you are already saving up for your down payment. If you pass this test, then you are truly ready to buy your next home.
Start building your memories,
as you turn your house into a home.
As you might guess, this document is a compilation of information from our own efforts as REALTORS, as well as input from other REALTORS in our Coldwell Banker office. I hope it has been of value to you. Don’t hesitate to email us with any suggestions that will make this document better for you and your fellow home owners!
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www.Facebook.com/ElkGroveRealEstate. For information about properties available for sale and for more information for buyers and sellers, please visit our website at www.ElkGroveRealEstate.com and don’t hesitate to give us a call or drop us an email with your questions.
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