How Soon Can You Buy a Home After a Foreclosure?
If you get a deed-in-lieu of foreclosure, can you still get a loan to buy a home?
The entity holding great power in the conventional mortgage market is Fannie Made – the largest American mortgage buyer and private corporation that buys mortgage loans in the secondary market. Fannie Mae has revised its guidelines and now says there are separate waiting periods depending on what type of foreclosure you are experiencing.
If there is a documented extenuating circumstance, then it will reflect on the number of years you will have to wait to get a conventional loan.
What is considered a Documented Extenuating Circumstances?
Extenuating circumstances are things that happen beyond your control that could affect your ability to pay your mortgage greatly….
- Illness
- Job Transfer
- Death
- Accident Resulting in Severe Injury
Thus, not being able to afford an increase in payment due to an interest rate increase on your adjustable rate (ARM) mortgage.
What are the waiting periods?
- Buying After a Foreclosure – The waiting period is 5 years to 7 years
- Buying After a Foreclosure with Extenuating Circumstances – The waiting period is 3 years to 7 years.
- Buying After a Deed-in-Lieu of Foreclosure – The waiting period is 4 years to 7 years
- Buying After a Deed-in-Lieu of Foreclosure with Extenuating Circumstances – The waiting period is 2 years to 7 years
- Buying After a Short Sale – The waiting period is 2 years.
If you do not have any extenuating circumstances, you will need to wait four years from the date of completion, meaning the date your deed-in-lieu of foreclosure was recorded.
In addition to the waiting period, some loans may require a 10% down payment and a minimum FICO score. The home will also need to be your principal resident (not an investment), not a rental or a vacation home.
Fannie Mae has been constantly releasing new guidelines and the above is for loan applications submitted after August 1, 2008.
