People who went through a foreclosure early in the recession are now qualifying for mortgage loans to buy houses in the Valley again.
Read my story, which appeared on Sunday’s Business page, about two Valley couples who repaired their credit and waited three years to jump back into the home buying market. There’s some information from loan officers too on what lenders are looking for.
But here’s a little more detail about qualifying for a loan from Academy Mortgage sales manager Lisa Sasaki:
- The three-year waiting period starts from the date the lender takes the property back, not the date of the actual foreclosure. We all know foreclosures can be a lengthy process.
- After three years, buyers can qualify for a mortgage loan that is backed by the Federal Housing Administration which only requires a 3.5% down payment. A traditional loan with a 20% down payment has a seven-year wait time after foreclosure.
- Those who went through a short sale, however, and are looking to put a 20% down payment on a new house only have to wait two to three years, Sasaki said.
First Cal Mortgage branch manager Sean Connolly said it’s possible for people who went through a short sale to buy a new home almost immediately without waiting if they continued to pay their monthly mortgage on time up until the close of escrow on the short sale.
“People were given bad advice on how to go about doing their short sale,” Connolly said. “Had they gone to a lender first, a mortgage banker and gotten the proper advice, they could have purchased a home after their short sale.”
These are just some things to keep in mind if you’re looking to buy again after suffering from a foreclosure or selling your home in a short sale. If you have questions or want more details, contact a real estate agent or a loan officer to discuss your specific situation.