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Cape Coral Real Estate

June 30, 2011

A sluggish housing marketplace has caused millions of homeowners to lose their house to foreclosure, short sale, or deed in lieu of foreclosure. But once these former homeowners get a greater deal with on their credit, how long do they have to sit on the sidelines until they can secure future financing to buy a property once again?

As an article in the New York Times notes, “there are a lot of asterisks and conditions” in terms of how long a borrower ought to wait following a “significant derogatory event,” like a foreclosure or short sale.

In general, even so, The New York Times reports that the longest wait to purchase again will come if there is a foreclosure inside the former homeowner’s past.

Fannie Mae and Freddie Mac have a three-year waiting period following a foreclosure, plus a two-year wait following a brief sale, deed in lieu, or discharge or dismissal of bankruptcy. However, if borrowers can justify that the circumstance for the foreclosure or bankruptcy occurred as a result of an illness or job loss – or other “extenuating circumstance” – that might help decrease their wait. But with no such extenuating circumstances, these former homeowners could have to wait longer, even up to seven years following a foreclosure or four years soon after bankruptcy, the article notes.

For loans insured by the Federal Housing Administration, borrowers with excellent credit afterwards also will, in general, have to wait 3 years after a foreclosure and two years following a bankruptcy is discharged, The New York Times notes.

Following a brief sale, borrowers will have to wait 3 years to secure one more FHA loan – nevertheless, there are plenty of exceptions. Borrowers will have to wait three years if they were in default at the time of the brief sale and had no extenuating circumstances. Nonetheless, if the borrowers had been on time with all their payments a year prior to the brief sale, they may have no wait at all and might even qualify for an FHA loan immediately.

Make sure to visit the Cape Coral Real Estate site

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