Waiting Period In Buying A Home After A Foreclosure

This BLOG On Waiting Period In Buying A Home After A Foreclosure Was UPDATED On July 5, 2017

Many homeowners have lost their homes via foreclosure due to the financial and real estate collapse of 2008.

  • A foreclosure on credit report can drop credit scores by 80 points or more.
  • The sudden drop of credit scores will increase as the foreclosure ages.
  • Home buyers can qualify for home loan after foreclosure.
  • Government Loans and Conventional Loans have mandatory waiting period requirements to qualify.
  • NON-QM Loans do not have any waiting period to qualify for mortgage but requires 20% down payment.
  • Potential home buyers should re-establish their credit after foreclosure.
  • There are many ways in boosting credit scores.
  • One such way is by getting secured credit cards .
  • Other ways of re-establishing credit is getting new credit such as auto loans and installment loans.
  • Buying a home after a foreclosure is possible but there are certain restrictions.

Obtaining Home Loan After Foreclosure

Home Buyers ready and interested in buying a home after a foreclosure must meet waiting period requirements with government and conventional loans.

Government Loans are the following:

  1. FHA Loans
  2. USDA Loans
  3. VA Loans

Waiting Periods On Government Loans After Foreclosure

  • There is a three year waiting period after foreclosure, deed in lieu of foreclosure, short sale to qualify for FHA and USDA Loans.
  • There is a two year waiting period to qualify for VA Loans after foreclosure, short sale, or deed in lieu of foreclosure.
  • Waiting period starts after the the deed of the house into the mortgage lender’s name or the date of the sheriff’s sale. 
  • Loan Officers with The Gustan Cho Team specialize in helping borrowers with prior bad credit and high debt to income ratio.
  • We originate mortgage loans and can help borrowers with credit scores under 600 as well as borrowers with open collections and judgments.

Re-building Credit Is Key Buying a Home After a Foreclosure

For those folks who have recently gone through a foreclosure, they should start re-establishing their credit right away.

  • One of the many requirements that most mortgage lenders require for borrowers who had a prior foreclosure or bankruptcy is that they do not want them to have a late payment on their credit record after a foreclosure or bankruptcy.
  • Make sure to make timely monthly payments.
  • Get 3 secured credit cards and use them regularly.
  • Keep in mind to always have credit balances below 20%.
  • Maxing out credit cards will hurt credit scores.
  • Do not apply for new credit too often 
  • Credit inquiries, hard pull, will decrease credit scores.
  • Try not to apply for no more than two credit items in any six month period.
  • Try to get an installment or car loan.
  • For example, consumers who need to purchase a used car for $2,000 and have the cash to buy it outright, finance part of it by putting $1,000 down. and finance the other $1,000.

Mandatory Waiting Period After A Foreclosure

For those who cannot wait the 3 year mandatory wait period in buying a home after a foreclosure, they would need to have a family member purchase it under their name and credit.

  • Many home buyers have their parents purchase the home as a second or investment home.
  • They can be on the title but not on the mortgage loan.

If you have any questions in buying a home after a foreclosure please contact us at 262-716-8151 or email us at gcho@gustancho.com.

Gustan Cho, NMLS ID 873293

Related> 2015 Waiting Period After Bankruptcy and Foreclosure

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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