Since 2005, millions of homeowners have had to go through a foreclosure process. Which is why they may now be ready to buy again after months to years of rebuilding their credit.
Are you one of the many Americans today looking to buy again after a foreclosure?
Three important things you must take into consideration when buying again after a foreclosure is:
- Every mortgage program has their own set of requirements and guidelines for borrowers with a history of foreclosure.
- You must make sure that your credit has been re-established enough and that you have not been late making any payments on any of your credit accounts prior to applying for a new mortgage loan.
- Make sure that you are prepared to provide any and all documents that an underwriter may ask for when getting a mortgage loan after a foreclosure.
Ready to Buy Again After Foreclosure: The Best Loan Program
While there are several great loan programs available to choose from after a foreclosure, some of the most popular and more common mortgage programs that home buyers tend to look into are usually, FHA home loans, VA home loans (if you qualify under the status of a veteran or active duty servicemember), and then there is the Conventional home loan. USDA home loans are one of them, but is mainly for those who are seeking to reside in a densely populated location, approved by the USDA as an eligible property to purchase.
Qualifying for an FHA Home Loan After a Foreclosure
After a change in program guidelines, the Federal Housing Administration (FHA) program has switched from a two (2) year waiting period to 12 months after a foreclosure. As long as the home buyer can prove to be a creditworthy borrower and can show that they can keep up with credit payments through the past 12 months of credit re-establishment, along with zero late payments made to credit cards, miscellaneous loans, and rental history.
The program typically requires for borrowers to have at least a minimum credit score of 580 or higher, which makes them one of the most easy mortgage loan programs to qualify for.
Qualifying for a Conventional Home Loan After a Foreclosure
Conventional mortgage guidelines states that for a Fannie Mae loan, you must wait at least seven (7) years after the sale date of the home that you have gave to foreclosure. However, there has been a few updated requirements that may apply for certain scenarios as of July 29, 2014 and they are:
A subsequent foreclosure included in a bankruptcy may now be waived. However, if the mortgage was comprised in the bankruptcy then there would be a default waiting period of at least four (4) years from the date that it was discharged.
Also effective as of August 8, 2014 is a Deed in Lieu of Foreclosure, if it is not included in a bankruptcy, the borrower may be offered the updated waiting period of four (4) years from the date in which the borrower’s name was removed from the title of the mortgage. This is rule was revised from the initial 24 months and requirement of 20 percent down payment followed by a credit score of 680 or higher.
Here are a few things to expect when applying for a Conventional mortgage loan after foreclosure:
- With a loan-to-value (LTV) of 90% or greater, you may be looking at seven (7) years of waiting.
- With a down payment of less than 10 percent, you may be required to purchase on Private Mortgage Insurance.
- A minimum credit score of 620 or higher may be required.
Keep in mind that the credit report taken into consideration when applying for a new mortgage loan is the one dated after the waiting period has ended to be considered eligible for financing under a Conventional after such financial hardship.
Qualifying for a VA Home Loan After a Foreclosure
Veterans or borrowers falling under the category of an active duty servicemember looking to buy again after a foreclosure may be able eligible after a waiting period of two (2) years. The expected credit score after this waiting period must be at least 620 or higher.
*All home buyers with a history of a foreclosure must wait until after the waiting period in order to apply for a VA mortgage.
Qualifying for a USDA Home Loan After a Foreclosure
The waiting period for home buyers looking to obtain a USDA home loan after a foreclosure is three (3) years. The minimum credit score expected for a USDA borrower is 640 or higher. Just like all other mortgage programs, you must wait until the waiting period is over for you to be able to apply for a new mortgage loan.
Buying Again After Foreclosure: Millions of Buyers
The good news is that if you were one of the millions of homeowners who went through foreclosure, then you are not alone when it comes to wanting to buy a home again. Buying a home after foreclosure is going to be one of the hottest segments of home buyers in 2015-2016 as the waiting period ends for many people who went through foreclosure in prior years. If you are one of the many homeowners who are in this situation currently, be excited to know that many lenders are finding creative solutions to help people qualify for buying a home again after foreclosure because there are so many people who were in this situation.
Mortgage Lenders Helping Buyers After Foreclosures
There are many lenders who are coming up with creative portfolio products that are different than the standard waiting periods of FHA, VA or Conventional loan products. The best way to learn about these programs that are available is to submit your information below and we will work hard to match you up with a lender who specializes in helping people who are in this situation. Submitting your information is easy, free and one of our lenders who specializes in your situation will be in touch with you very quickly.
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