Losing a home in a foreclosure is never the life event anyone has planned as part of their goals. Circumstances change, events outside of our control happen. It is a fact of life. But after the foreclosure, how you handle your finances will greatly impact the next time you want to buy.
For underwriting purposes, a short sale is considered the same as a foreclosure!
Here are a few facts that you should know. A foreclosure on your credit report will have an impact on your ability to purchase a new home. The amount of time you have to wait will depend on the type of financing you are looking for and the amount of your down payment and the rest of your credit rating.
The first thing you should know is that a foreclosure (or any public record ie, bankruptcy, judgement, foreclosure) can negatively impact your credit score between 100-200 points. You can plan on that foreclosure being on your credit report for the next 10 years.
Under today's guidelines, a new purchase is possible following the table below:
FHA - Must wait 3 years from the date of completion of the foreclosure
FNMA (Conventional) - Must wait 2 years with a 20% down payment
Must wait 4 years with a 10% down payment
Must wait 7 years with a minimal down payment
FreddieMac (Conventional) - Must wait 7 years from the date of completion
VA - Must wait 2 years from the date of completion
USDA - These will be approved by exception only. No foreclosure activity within the previous 36 months, and supporting documentation to show this was a one time occurance beyond the borrowers control.
For further information, please feel free to contact me.
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The opinions and general information in this blog are soley those of Kathy Sheehan. Specifics regarding an individual case should be discussed in detail with a loan professional. For a confidential consultation, please feel free to contact me via phone or email. All terms and conditions are subject to change.