Read below to find out when can I buy a house again after foreclosure
After one has gone through the dreaded and nasty foreclosure experience, the thought of when can I buy a house after foreclosure may seem inappropriate. The good news is that even though your credit cards score has taken a huge hit, you are still eligible for home loans to buy a home as time passes. Your financial circumstances and your lender have a crucial role in deciding when I can buy a house after foreclosure.
FHA loan
FHA loans are the easiest to get after a home to foreclosure. To qualify for this loan, you will have to wait for at least three years after a foreclosure. The clock starts to tick once your old home was sold in the foreclosure, and your foreclosure case ended. The waiting period of three years began on the date when the FHA paid off the last lender ultimately if your earlier foreclosure also was an FHA loan.
The lender considers extenuating circumstances like the death of a wage earner or a serious illness to offer a loan. However, if you could not sell the property due to a relocation or job transfer and thus did not pay, this does not count as an extenuating reason. Also, the lender does not consider divorce to be one of the extenuating reasons.
Fannie Mae or Freddie Mac loan
To qualify for the Fannie Mae or the Freddie Mac loan, you need to wait for at least seven years after the foreclosure. However, there are some ways to lessen this waiting time and solve your question about when I can buy a house again after foreclosure.
Here are the requirements that you should meet to get the Fannie Mae or Freddie Mac loan approved. You should:
- Be able to prove that the reason for the foreclosure was because of an extenuating circumstance.
- Be able to show that the maximum of the loan to value or LTV ratio of the new mortgage you have taken is 90%. Or it should meet the LTV ratio in the eligibility matrix of the Fannie Mae loan, whichever of them is greater.
- Be using the new mortgage loan sanctioned to either purchase a personal home, or you may use a limited cash-out refinance. You cannot use the loan to purchase a second home or invest in an investment property.
Private or conventional lenders
You may even want to approach a conventional lender who can get you a loan and then rest your doubt of when to buy a house again after foreclosure. However, the private mortgage insurance company would look for a waiting period between two to eight years. There could be some private mortgage lenders who would be ready to shorten your waiting period to 12 months after foreclosure. For this, they would, in turn, ask you to make a large down payment. It could be more than 25%, and the lender may also ask you for a higher interest rate.
VA Loans
After your foreclosure, you will have to wait for at least two years to get the new VA mortgage. However, you will have to produce proof of your credit report that should have been reestablished by now.
The lender does allow any extenuating circumstances in the VA loan. However, this needs to be well documented. To know when I can buy a house again after a foreclosure, you need to improve your credit score. If the foreclosed loan were a VA loan, you would not be entitled to an additional VA loan until the original VA loan has been paid off completely.
Lenders do not like to sanction a loan to a defaulter.
A foreclosure on your credit card is a red flag, and lenders do not usually like such borrowers. However, there is still hope if you wonder when I can buy a house again after foreclosure. A lender would be ready to lend to you even after you have gone through foreclosure if you have a good credit score after the foreclosure and a rehabilitated life.
The lender would be interested to see proof of the circumstance that forced you to opt for foreclosure. He would consider the things that are not under your control and likely not be repeated. This could be anything like a medical emergency or job losses.
If you have now recovered from the same, this increases your chances as a boomerang buyer of getting the required approval. If you had some addiction that caused you to lose all your money, this would not get your loan approved.
The underwriter will look for the following:
- A good credit before the foreclosure
- Good credit score after the foreclosure
- Whether the foreclosure was a one-time event
- You are recovered or have made changes to your lifestyle since the foreclosure event.
Deed in lieu and short sales waiting period
If you wish to find out when I can buy a house again after a foreclosure, you need to wait for the waiting period, as stated above, before applying for the loan. The waiting period is shorter in the case of foreclosure short sales or deeds in lieu of foreclosure.
The lender has the power to put in the additional clause and increase the waiting period in these short sale circumstances.
The final word
If you would like to avoid all this situation and the pain, use our services before choosing to foreclose your loan. We buy your house in exchange for cash. Just call us up, and we shall buy your home paying you cash within 5 days and save you from a bad credit score and a foreclosure.