Due to the recent housing crisis millions of people across the United States were forced to choose foreclosure because they were underwater on their mortgages.
Over the last few years since their foreclosures the most common question that homeowners who foreclosed on their home is “how long do I have to wait to buy a home after foreclosure?” The answer to this question depends on a variety of factors.
If you owned a home in the last few years and you had to choose foreclosure you should be prepared to wait seven years if you had a conventional loan. Seven years is a very common waiting period for people who had conventional loans that were backed by Fannie Mae or Freddie Mac. When a former (foreclosed) homeowner who had a conventional loan chooses to apply for another conventional loan they can also expect to be faced with stricter debt-to-income and credit requirements when they apply for another conventional loan again.
For members of the Military who are active or retired and had a VA loan they can expect a two year waiting period before they can apply for another mortgage loan.
Thanks to FHA loans former homeowners who were forced to choose foreclosure because of situations beyond their control can apply for an FHA loan in as little as one year once their foreclosure is completed.
Before applying for an FHA loan the party who applies for an FHA loan must be prepared to submit documentation that proves their foreclosure was caused due to situations beyond their control like a job loss, medical emergency or their financial catastrophe was caused by the recent economic crash and recession.
Foreclosures Impact on Credit
Foreclosures will take a hit of at least 100 points off your credit score and it’s important for anyone who went through a foreclosure to make sure they take the time to ensure that their credit is in good shape as well by paying off excess debts and having a good debt-to-income ratio before applying for a mortgage loan again.
For all of your Real Estate needs contact Fred Sed & Associates today by calling us at (949) 272-0125 to view the latest homes for sale in Orange County and more.
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