How To Qualify For Mortgage After Foreclosure

Gustan Cho Associates

Qualifying For Mortgage After Foreclosure

The 2008 Real Estate and Mortgage Collapse has affected millions of homeowners.  The Great Recession of 2008 affected millions of hard working American workers.  Millions of American workers lost their jobs, lost their businesses, or had substantial reduction in income where they could no longer afford their mortgage loan payments and subsequently had to foreclose on their homes.  Million of homeowners who thought they had equity in their homes has seen most or all of their equity in their homes vanish literally overnight.  Home values plummeted throughout the country.  Many homes in California, Florida, Illinois, Texas, and Indiana have lost over 50% of their values.  A large percentage of homeowners had mortgage loan balances that were higher than the value of their homes.  Foreclosure rates hit a historical high.  Large percentage of mortgage loan borrowers had sub prime mortgage loans with teaser rates where the introductory rate on a negative amortization and when the mortgage loan adjusted to the new mortgage rates, it double or tripled sometimes and could no longer afford their new adjusted mortgage rate payments and were forced to foreclosure.  Never in history were foreclosure, deed in lieu of foreclosure, short sale, and bankruptcy rates have been as high as it has been from 2008 until mid 2012.  The recession might be over technically but the economy is still bruised.  Unemployment numbers may be reduced according to economic reports but many workers have given up looking for jobs and many skilled workers are underemployed where they are now in jobs that they are overqualified for.  The mortgage industry has lost over half of its work force and many in the real estate and construction fields still remain unemployed or have left the field altogether.  Those who have recovered and had a prior foreclosure can now qualify for a mortgage after foreclosure.

Qualifying For FHA Mortgage After Foreclosure

FHA has the most lenient qualification requirements in qualifying for a mortgage after foreclosure.  There is a mandatory three year waiting period to qualify for a FHA mortgage after foreclosure.  The waiting period starts from the recorded date of the foreclosure or the date of the sheriff’s sale and not the day you turned in your keys.  The waiting period starts when the deed of your home has been transferred out of your name and into the name of the mortgage lender.  Besides the waiting period requirements, the borrower needs at least a 580 FICO credit score to qualify for a 3.5% down payment FHA loan.  Mortgage underwriters expect the borrower to have re-established credit and no late payments in the past 12 months.  Borrowers with credit scores of under 600 FICO may need to provide verification of rent .

Conventional Mortgage After Foreclosure

Conventional Loans have a tougher stance when it comes to mortgage after foreclosure.  There is a 7 year mandatory waiting period to qualify for a conventional mortgage after foreclosure.  The waiting period starts from the recorded date of the foreclosure which is reflected on the recorder of deeds office and/or public records.

Mortgage Part Of Bankruptcy

If you have had your mortgage part of your bankruptcy, the waiting period starts from the discharge date of your bankruptcy and not the recorded date of your foreclosure.  If you had a mortgage part of bankruptcy, you can have your foreclosure recorded after the discharge date of your bankruptcy.  There is a mandatory 4 year waiting period to qualify for a conventional loan if you had mortgage part of bankruptcy.

Related> Qualifying for mortgage after deed in lieu and foreclosure

Related> Selling your home prior to foreclosure

Related> Conventional Refinance Mortgage after Foreclosure

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