Buying a Home After ForeclosurePosted Monday, August 25, 2014
If you’ve recently gone through a foreclosure, you may already be wondering how soon you’ll be able to buy another home. You enjoy the pride of homeownership, and you want to buy as soon as possible so that you can take advantage of today’s lower prices.
Here are answers to two commonly asked questions about buying a home after foreclosure:
How soon can we buy a home after a foreclosure?
These are the current waiting periods on conventional and FHA home loans, depending on the type of foreclosure you went through:
Foreclosure – FHA is 3 years (although can be as short as 1 year), Conventional is 4-7 years
Short sale FHA – if not delinquent before it happened no wait
Short sale Conventional – can be 2 years at 80% LTV, 4 yrs at 90% LTV and Seven years for 95% – however, if there was a bankruptcy involved it is 4 years.
Short sale conventional can also be 2 years if extenuating circumstances.
What can we do during that waiting period to prepare us for success when buying a home?
When you go through a full foreclosure, expect your credit score to decline by 140 to 150 points. You’ll also have negative marks from the foreclosure on your credit report for as long as seven years, which makes it more difficult to buy a home. The number one thing you need to do to prepare to buy another home is to fix your finances:
Reduce or pay off your debt.
Pay every bill on time, every time.
Eliminate unnecessary monthly expenses.
Dispute any mistakes on your credit report.
Save for a future down payment.