Buying A Home After A Foreclosure Mortgage Guidelines
This BLOG On Waiting Period In Buying A Home After A Foreclosure Was UPDATED On December 10th, 2018
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 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 10% to 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:
- FHA Loans
- USDA Loans
- 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 at Gustan Cho Associates Mortgage Group 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 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 text us for faster response. Or email us at firstname.lastname@example.org.