Have you experienced a foreclosure or gone through a bankruptcy in the last few years? Have you been renting or living with family and ready to buy another home? Maybe you want to relocate to another area and purchase a house. If so, your biggest hurdle will be getting another mortgage.
People in your situation are starting to trickle back into the market. They have been rebuilding their credit and saving money for a down payment. If you think you are now ready to buy, there are a few things you need to know.
Home buyers who have experienced a foreclosure or bankruptcy can expect waiting periods before they can get a mortgage approved. If you had a foreclosure on a Fannie Mae or Freddie Mac loan you can expect to wait seven years before you can get another mortgage. Sometimes it’s as low as three years, but that is when there are extenuating circumstances like death of a wage earner. If you had a Chapter 7 or 11 Bankruptcy it will take about four years before you can get a new mortgage. And with Chapter 13 it will take about two years from the discharge date or four years from the dismissal date.
Now if you had a VA Loan, it’s generally two years before you can get another loan whether it’s from a foreclosure or bankruptcy. With a VA loan, the buyer must have paid back the VA for it’s losses. After a Chapter 13 you can get another VA loan after making 12 months of payments to a court-appointed trustee. However, the trustee or the bankruptcy judge must approve the new credit.
If you had a mortgage backed by the Federal Housing Administration that was foreclosed on, you’ll have to wait three years. However, FHA may grant an exception if the foreclosure was a result of serious illness or death of a wage earner and you’ve established good credit. If you filed a Chapter seven bankruptcy then you’ll have two years after the discharge with re-establishing good credit before you can get a loan. And if it was a Chapter 13, your current or required payments will be considered.
These are the basic guidelines to follow, but you should talk to your lender about the obstacles that stand between you and home ownership. Don’t be ashamed. Your lender and Realtor can help you get back on track so that you can own a home in the future. Credit does heal over time and with planning on the owner’s part.
At Register Real Estate Advisors, I highly recommend Mike Lesmeister and his team at Ameripro Funding. Call our office at 281.288.3500 and ask for an agent to help you and Mike Lesmeister. With our team on your side, you’ll most likely be ready to purchase another home real soon.