Home Purchase After Bankruptcy And Foreclosure

This BLOG On Home Purchase After Bankruptcy And Foreclosure Was UPDATED On July 2, 2017

The real estate and credit collapse of 2008 has affected millions of homeowners.

  • The burst of the housing bubble not only set records in foreclosures but also affected many American workers with massive layoffs.
  • Many business owners either went out of business or had major reduction in business.
  • The drastic loss of income forced many homeowners left with mortgage loan balances higher than what their home were worth in value.
  • Many had to downsize to smaller homes due to the real estate meltdown.
  • Most homeowners lost all of their equity in their homes.
  • Large percentage of homeowners had mortgage loans that were higher than the value of their homes.
  • Millions of Americans could not afford their sub-prime mortgage loans and had to resort to foreclosure.
  • Economy has recovered and Home Purchase After Bankruptcy And Foreclosure is now possible with government loans and conventional loans.
  • There is no waiting period for Home Purchase After Bankruptcy And Foreclosure but 20% down payment is required.

Real Estate And Mortgage Meltdown Of 2008

As a result of this financial disaster, which many believe it was the second great depression, a substantial percentage of homeowners were forced into bankruptcy, foreclosure, or short sale.

  • Many homeowners who lost their homes gave up on ever owning a home again.
  • Many Americans who filed bankruptcy never thought they could purchase another home again.
  • New mortgage regulations were created and implemented to help homeowners who lost their home to bankruptcy and foreclosure become homeowners again.
  • Home Purchase After Bankruptcy And Foreclosure and short sale became possible. 
  • There are waiting periods Home Purchase After Bankruptcy And Foreclosure.
  • NON-QM Loans and bank statement mortgage loans are becoming popular on Home Purchase After Bankruptcy And Foreclosure and do not require waiting period after bankruptcy and/or foreclosure but does require 20% down payment.

Qualifying For Mortgage After Short Sale

A short sale is a pre-foreclosure sale of the home in lieu of foreclosure proceedings which results in a reduced mortgage loan payoff amount.

  • The reduction of the mortgage loan balance is approved by the homeowners lender. The lender will approve an amount that is less than the total amount owed.
  • The lender will take the reduced payoff amount and give permission to the homeowner to short sale the property.
  •  Short Sales are approved by lenders because the value of the home is less than the mortgage loan balance.
  • Homeowners with a prior short sale can qualify for a new mortgage after meeting the mandatory waiting period after short sale on the loan program they are applying for.

Conventional Loan After Bankruptcy And/Or Foreclosure

  • Home Buyers can qualify for a conventional loan after a short sale and/or deed in lieu of foreclosure after 4 years.
  • Conventional mortgage loan requirements for purchasing a home after bankruptcy, short sale, or foreclosure differs than those of other mortgage loan programs like FHA insured mortgage loans and VA guaranteed mortgage loans. 
  • To qualify for a conventional home loan backed by Fannie Mae, the following conventional mortgage loan waiting guidelines apply.

How Long Should I Wait After Foreclosure, Deed In Lieu, Short Sale?

To qualify for a conventional mortgage loan after a foreclosure, the waiting period is 7 years from the date of the sheriff’s sale or the date the deed of the home was transferred out of the mortgage loan borrower’s name and into the mortgage lender’s name.

  • There used to be a two year waiting period in order to apply for a conventional mortgage loan after a short sale and/or deed in lieu of foreclosure.
  • Home buyers had to put 20% down payment so that the loan to value is 80%. 
  • This is no longer effective.
  • The waiting period has been changed to a 4 year waiting period after deed in lieu of foreclosure and/or short sale to qualify for conventional loans.
  • 3% down payment is required for first time home buyers and 5% down payment is required for seasoned home buyers.
  • There is a 7 year waiting period in order to qualify a mortgage loan borrower to qualify for a conventional mortgage loan after the recorded date of a standard foreclosure.

Qualifying for Conventional Loan After Bankruptcy

  • For conventional mortgage loans backed by Fannie Mae and/or Freddie Mac there is a four year waiting period to qualify for Conventional Loans After Chapter 7 Bankruptcy.
  • There is a two year waiting period to qualify for Conventional Loan after Chapter 13 Bankruptcy discharged date.
  • There is a four year waiting period to qualify for conventional loans after a Chapter 13 Bankruptcy dismissal date.

Qualifying For FHA Loans After Bankruptcy And Foreclosure

There are waiting period requirements to qualify for FHA Loans after bankruptcy and foreclosure.

  • There is a 3 year waiting period to qualify for FHA Loans after the recorded date of a foreclosure and/or deed in lieu of foreclosure.
  • There is a two year waiting period to qualify for FHA Loans After Chapter 7 Bankruptcy discharged date.
  • There is no waiting period to qualify for FHA Loan after Chapter 13 Bankruptcy discharged date.
  • Home Buyer who are currently in a Chapter 13 Bankruptcy Repayment Plan can qualify for FHA Loans one year into their Chapter 13 with Trustee Approval.
  • To qualify for a FHA insured mortgage loan after a short sale, the waiting period is 3 years from the date of the short sale.

Qualifying For VA Loans After Bankruptcy And Foreclosure

  • To qualify for a VA mortgage loan after a short sale, the waiting period is 2 years from the date of the short sale in order to qualify for a VA mortgage loan.
  • There is a two year waiting period to qualify for VA Loans after recorded date of deed in lieu of foreclosure. 
  • There is a two year waiting period to qualify for VA Loans after recorded date of standard foreclosure.
  • There is a two year waiting period to qualify for VA Loans after Chapter 7 Bankruptcy.
  • The requirements for a VA mortgage loan after a Chapter 13 bankruptcy, a mortgage loan borrower needs to have entered into a payment plan for one year with all monthly payments made timely. 
  • The permission of the Bankruptcy court is required to enter into the new mortgage loan.

2017 Update On Qualifying For Conventional Loan With Mortgage Part Of Bankruptcy

  • Home buyers who had mortgage part of Chapter 7 Bankruptcy, waiting period is four years from the discharged date of the Chapter 7 Bankruptcy.
  • The foreclosure and/or short sale can be recorded after the discharged date of the Chapter 7.
  • The four year time clock starts the date of the discharged date.
  • This does not apply on government loans (FHA, VA, USDA ).
  • On government loans, the waiting period is four years from the recorded date of the deed in lieu and foreclosure or short sale date which is normally after the discharged date of the Chapter 7 Bankruptcy.

Home buyers are interested in purchasing a home after bankruptcy, deed in lieu, short sale or foreclosure can contact us at 1-800-900-8569 to get qualified or email us at gcho@gustancho.com

Related> 2015 Guidelines on Mortgage After Bankruptcy

Related> Mortgage After Bankruptcy: 2015 Guidelines

Related> Qualifying for Mortgage 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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