Christian Penner's Blog

Buying a Home After Short Sale or Foreclosure

 Buying a Home After Short Sale or Foreclosure

 

What You Need To Know When Buying a Home After Short Sale or Foreclosure, Christian Penner Mortgage Banker West Palm Beach

As a Mortgage Banker who has been heavily involved in closing short sales over the last five years, one of the questions that I get asked quite often from home sellers is how long will it take before I will be able to buy a home again.

The answer to this question does not have any clear cut and dry answer. There are quite a few variables involved when trying to figure out when someone will be able to purchase a home after a foreclosure or short sale.

Going through either a short sale or a foreclosure has the potential to seriously impact ones credit.  Government entities Fannie MaeFreddie Mac and FHA do not directly loan money to individuals but are the governing body that work with lenders to guarantee loans and free up money to provide mortgages.

Banks typically have the authority to lend to whoever they want but will generally follow the guidelines set forth by these entities. There are some lenders of course that will take greater risks with some borrowers than others.

Below are the general guidelines that FHAFannie Mae and Freddie Mac follow when considering a loan after a short sale or foreclosure:

 

Short sale with FHA Loan

  • Can purchase right away with no mortgage default
  • 3 year wait if in default at the closing
  • Reduced wait if the borrower has re-established good credit and can show extenuating circumstances

 

Short Sale With Fannie Mae Loan

  • 2 year wait if the borrower puts 20 % down
  • 4 year wait if the borrower puts between 10% to 20% down
  • 7 year wait if the borrower puts less than 10% down
  • 2 year wait if the borrower can show extenuating circumstances and puts more than 10% dow

Short Sale with Freddie Mac Loan

  • 4 year wait before being able to get a loan
  • 2 year wait if the borrower can show extenuating circumstances

 

Foreclosure with an FHA Loan

  • 3 year wait before being able to get a loan
  • Reduced wait if the borrower can show extenuating circumstances and re-establishes good credit

 

Foreclosure with a Fannie Mae Loan

  • 7 year wait from the completed foreclosure sale date
  • 3 year wait if the borrower can show extenuating circumstances. Additional underwriting requirements apply for 4 years after a 3 year waiting period.
  • 7 year wait for a 2nd home, cash out re-financing, or an investment property

 

Foreclosure with a Freddie Mac Loan

  • 5 year wait from the completed foreclosure sale date
  • 3 year wait if the borrower can show extenuating circumstances

** As a side note a deed in lieu of foreclosure follows the same guidelines as FHA’s foreclosure policy, the same as Fannie Mae and Freddie Macs short sale policy.

When analyzing the difference between completing a short sale or going through a foreclosure in regards to purchasing another property in the future it boils down to the waiting time which is more favorable in a short sale.

Credit Scoring After Short Sale and Foreclosure

The other question that I get from people considering a short sale is how it will impact their credit. There is a lot of misleading information that come from Realtors, as well as online forums about the impact on Credit Score.. On many occasions you will hear that a short sale is far better for your credit than getting foreclosed on. This is incorrect! A Credit Score. in a short sale or a foreclosure have the potential to be about the same. Maybe marginally better in a short sale.

 

According to Fair Issac (www.MyFICO.com) a company that provides analytic, decision making and Credit Scoring services for financial service companies a Credit Score will go down by 40 to 110 points after being 30 days late.  Further, the scoring drop will increase to 70 to 135 points after 90 days late on a mortgage payment.

The average scoring drop in a short sale, foreclosure or deed in lieu is 85 to 160 points. You need to keep in mind that in both short sales and foreclosure it is possible that the Credit Score drop could be closer to 200-300 points.

Credit Scoring factors vary from individual to individual. The scoring change is heavily dependent on where the credit score was before the negative event took place. Both a short sale and foreclosure are considered a loan that was not paid as agreed.

What happens to your Credit Score in each of these events could be different than someone else who goes through the same financial event. Unfortunately, most of the time the higher the Credit Score the greater the decrease from where you started.

When trying to decide whether a short sale is right for you don’t be fooled into making the decision under false hopes that your credit will not be impacted all that much. The biggest advantage in a short sale is the shortened time frame in which you will be able to purchase a home in the future.

One of the most important steps after going through either a short sale or foreclosure is to be conscious about trying to improve your credit standing.

 

*** The above information for waiting periods before buying a home after completing a short sale and foreclosure was sourced by theFannie Mae Selling Guide and Freddie Mac selling guides along with the FHA handbook.

Also go to: www.YourCreditRepairCompany.com for more information concerning your credit or to start the 90 credit make over program.

 



Christian Penner
NMLS#368289
Mobile: 561-373-0987
Office: 561-277-2150
Website: Visit Website
eMail: Contact

The Christian Penner Mortgage Team
250 Central Blvd, suite 101
Jupiter, FL
Blog Archives
November 2014 (58)
Mortgage Market Guide: ....
PAPER.li News | Mashabl....
PAPER.li News | Mashabl....
Palm Beach County REALT....
Mortgage Market Guide: ....
Palm Beach County REALT....
Homes & Money Newsl....
Agent Mastermind: 2015 ....
Tips for Long Distance ....
When Sellers Won't Nego....
Tips for Long Distance ....
Palm Beach County Real ....
What is the fastest gro....
Mortgage Market Guide: ....
What is the fastest gro....
Real Estate News Intern....
Real Estate Market Reco....
Agent Mastermind: 2015 ....
Personal Capital Review....
Mortgage Market Guide: ....
Real Estate Market Reco....
When Sellers Won't Nego....
Personal Capital Review....
Palm Beach County Real ....
Homes & Money Newsl....
Real Estate News Intern....
Mortgage Market Guide: ....
Wellington Investment P....
Mortgage Market Guide: ....
Wellington Investment P....
Mashable: 5 tips for bu....
YOU Magazine : It's Tur....
Mashable: Lava flow cla....
Bubble Fears over Jupit....
YOU Magazine : It's Tur....
Bubble Fears over Jupit....
Mashable: Lava flow cla....
Mashable: 5 tips for bu....
Buying a Home to Renova....
Q3 2014 Palm Beach Coun....
Palm Beach County House....
Informed Jupiter Tenant....
Informed Jupiter Tenant....
Q3 2014 Palm Beach Coun....
Palm Beach County House....
Buying a Home to Renova....
Selling an Jupiter Home....
Selling an Jupiter Home....
Mortgage Market Guide: ....
Green Tips for Selling ....
Mortgage Market Guide: ....
Green Tips for Selling ....
3 Things to Look for in....
After Making a Differen....
People that Have a New ....
People that Have a New ....
After Making a Differen....
3 Things to Look for in....
September 2014 (67)
On Considering Rental H....
On Considering Rental H....
Can a Wellington Real E....
Can a Wellington Real E....
Mortgage Market Guide: ....
Mortgage Market Guide: ....
Continuing Low Mortgage....
Selling a Home Strategi....
Selling a Home Strategi....
Continuing Low Mortgage....
Federal Reserve Press R....
Federal Reserve Press R....
The FHA 203k Mortgage F....
The FHA 203k Mortgage F....
A Wellington Property I....
An Open House in Jupite....
An Open House in Jupite....
Schools Can Play a Lead....
A Wellington Property I....
Schools Can Play a Lead....
Mortgage Marketing Guid....
Mortgage Marketing Guid....
For Busy Households, Ju....
For Busy Households, Ju....
Agent Mastermind: Do th....
Agent Mastermind: Do th....
Selling Your Home in We....
Selling Your Home in We....
Market Awareness Bolste....
Market Awareness Bolste....
Why a Jupiter Home Auct....
Views You Can Use: News....
Views You Can Use: News....
Why a Jupiter Home Auct....
Mortgage Market Guide: ....
Mortgage Market Guide: ....
How to Find the Right R....
The Pros to Consult bef....
The Pros to Consult bef....
How to Find the Right R....
Selling Your Home - Ass....
Agent Mastermind Saturd....
Agent Mastermind : How ....
Agent Mastermind : How ....
Investment Properties -....
Investment Idea with Le....
Investment Idea with Le....
Investment Properties -....
Agent Mastermind Saturd....
Selling Your Home - Ass....
First Time Home Buyers ....
Home Improvement Factor....
Jupiter Staging Profess....
A Jupiter Virtual Tour ....
As Summer Wanes, Wellin....
When Selling a Home in ....
Jupiter Staging Profess....
As Summer Wanes, Wellin....
First Time Home Buyers ....
When Selling a Home in ....
A Jupiter Virtual Tour ....
Home Improvement Factor....
Mortgage Marketing Guid....
Mortgage Marketing Guid....
Like Selling, Buying a ....
Downsizing in Follows a....
Downsizing in Follows a....
August 2014 (53)
Time-Savers for Buying ....
The One Chance a Wellin....
Time-Savers for Buying ....
The One Chance a Wellin....
Like Selling, Buying a ....
Jupiter Listings Share ....
Serious Buyers Typify P....
Jupiter Listings Share ....
Serious Buyers Typify P....
Agent Mastermind Saturd....
Agent Mastermind Saturd....
Credit Score Changes Co....
3 Things to Keep In Min....
3 Things to Keep In Min....
Alternate Programs Some....
Alternate Programs Some....
Credit Score Changes Co....
YOU Magazine - August 2....
YOU Magazine - August 2....
Wellington Rental Homes....
Wellington Rental Homes....
Property Type Wording C....
Property Type Wording C....
The Resurgence of the J....
Agent Mastermind Saturd....
Agent Mastermind Saturd....
The Resurgence of the J....
Today's Jupiter New Hom....
Today's Jupiter New Hom....
West Palm Beach Rental ....
Which Renovations Make ....
West Palm Beach Rental ....
Which Renovations Make ....
Jupiter Real Estate Age....
Jupiter Real Estate Age....
Agent Mastermind Strate....
Agent Mastermind Strate....
Investing in Wellington....
Investing in Wellington....
Buying a Home in West P....
Buying a Home in West P....
Fannie Mae Ending HomeP....
Selling Your Jupiter Ho....
Selling Your Jupiter Ho....
Fannie Mae Ending HomeP....
Locating the Neighborho....
Locating the Neighborho....
Agent Mastermind Tuesda....
Agent Mastermind Tuesda....
Digging for the True Co....
J.P. Morgan Chase is pu....
Digging for the True Co....
J.P. Morgan Chase is pu....
February 2014 (54)
Palm Beach County Listi....
Palm Beach County Listi....
VA May Be the Best Loan....
Another Business Booste....
VA May Be the Best Loan....
To Buy a Home in West P....
New News for the Revers....
New News for the Revers....
To Buy a Home in West P....
Rising Property Values ....
Rising Property Values ....
MMG Weekly: Let it Slow....
MMG Weekly: Let it Slow....
Homes & Money Newsl....
Homes & Money Newsl....
Unexpected Influences o....
Unexpected Influences o....
Another Business Booste....
VA May Be the Best Loan....
Getting a Loan in West ....
Getting a Loan in West ....
VA May Be the Best Loan....
Buying Real Estate in W....
Key Early Decision: Pic....
Key Early Decision: Pic....
Buying Real Estate in W....
Child's College Housing....
MMG Weekly: Bonds Not F....
MMG Weekly: Bonds Not F....
Child's College Housing....
Preparing for Multiple ....
Words you can't afford ....
Preparing for Multiple ....
Words you can't afford ....
A Deft Hand Needed for ....
A Deft Hand Needed for ....
Sell Your Property - A ....
Sell Your Property - A ....
Why Property Management....
Happy Valentine's Day
Happy Valentine's Day
Why Property Management....
Palm Beach County Home ....
YOU Magazine : A Home-C....
Palm Beach County Home ....
YOU Magazine : A Home-C....
Getting a Loan With a R....
Getting a Loan With a R....
Wall St. Crunches Numbe....
"All the House is ....
"All the House is ....
Wall St. Crunches Numbe....
An Open House in West P....
An Open House in West P....
December 2013 (62)
MMG Weekly: Happy New Year
Understanding the Bank'....
Understanding the Bank'....
MMG Weekly: Happy New Year
Google Hangouts
Happy New Year
Google Hangouts
Happy New Year
MMG Weekly: Let the Tap....
MMG Weekly: Let the Tap....
Updated: 10-Year ARM Co....
Updated: 10-Year ARM Co....
Easy Mistakes For First....
Easy Mistakes For First....
Palm Beach County Home ....
Most Palm Beach County ....
Proactive Homeowners So....
Another Business Booste....
Another Business Booste....
Selling Your Home Is a ....
Palm Beach County Home ....
Selling Your Home Is a ....
Proactive Homeowners So....
Beyond Impulse: an West....
Buying a House Can Mean....
MMG Weekly: Taper Fears....
Buying a House Can Mean....
Most Palm Beach County ....
Beyond Impulse: an West....
MMG Weekly: Taper Fears....
Taking Active Steps Can....
New Home Choices Benefi....
Taking Active Steps Can....
New Home Choices Benefi....
Happy Holidays
Happy Holidays
FHA News Alert: 2014 Lo....
Readying Your Home for ....
Inspection Can Prevent ....
MMG Weekly: Good News R....
Readying Your Home for ....
Inspection Can Prevent ....
Palm Beach County Selle....
MMG Weekly: Good News R....
Palm Beach County Selle....
FHA News Alert: 2014 Lo....
YOU Magazine: Allow You....
YOU Magazine: Allow You....
Mistakes to Avoid As a ....
Mistakes to Avoid As a ....
Upgrades That Can Actua....
Selling Your Home in Pa....
Upgrades That Can Actua....
Selling Your Home in Pa....
Real Estate is Real Est....
Real Estate is Real Est....
Beating Cash Offers for....
Beating Cash Offers for....
MMG Weekly: Thanksgivin....
MMG Weekly: Thanksgivin....
Palm Beach County Real ....
Palm Beach County Real ....
August 2013 (1)
October 2012 (1)
September 2012 (1)
August 2012 (1)
Design & Contents Copyright © 2014 - AgentMarketing.com - All rights reserved - Marketing for Real Estate Agents