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
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: ....
Selling a Home Strategi....
Continuing Low Mortgage....
Continuing Low Mortgage....
Selling a Home Strategi....
Federal Reserve Press R....
Federal Reserve Press R....
The FHA 203k Mortgage F....
The FHA 203k Mortgage F....
An Open House in Jupite....
Schools Can Play a Lead....
A Wellington Property I....
Schools Can Play a Lead....
An Open House in Jupite....
A Wellington Property I....
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....
Market Awareness Bolste....
Market Awareness Bolste....
Selling Your Home in We....
Views You Can Use: News....
Why a Jupiter Home Auct....
Why a Jupiter Home Auct....
Views You Can Use: News....
Mortgage Market Guide: ....
Mortgage Market Guide: ....
The Pros to Consult bef....
The Pros to Consult bef....
How to Find the Right R....
How to Find the Right R....
Selling Your Home - Ass....
Agent Mastermind : How ....
Investment Properties -....
Investment Idea with Le....
Agent Mastermind Saturd....
Investment Properties -....
Agent Mastermind : How ....
Agent Mastermind Saturd....
Investment Idea with Le....
Selling Your Home - Ass....
As Summer Wanes, Wellin....
As Summer Wanes, Wellin....
First Time Home Buyers ....
First Time Home Buyers ....
A Jupiter Virtual Tour ....
When Selling a Home in ....
Jupiter Staging Profess....
Home Improvement Factor....
Jupiter Staging Profess....
When Selling a Home in ....
Home Improvement Factor....
A Jupiter Virtual Tour ....
Mortgage Marketing Guid....
Mortgage Marketing Guid....
Downsizing in Follows a....
Like Selling, Buying a ....
Downsizing in Follows a....
August 2014 (53)
The One Chance a Wellin....
Like Selling, Buying a ....
Time-Savers for Buying ....
The One Chance a Wellin....
Time-Savers for Buying ....
Jupiter Listings Share ....
Serious Buyers Typify P....
Serious Buyers Typify P....
Jupiter Listings Share ....
Agent Mastermind Saturd....
Agent Mastermind Saturd....
3 Things to Keep In Min....
Credit Score Changes Co....
3 Things to Keep In Min....
Credit Score Changes Co....
Alternate Programs Some....
Alternate Programs Some....
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....
The Resurgence of the J....
Agent Mastermind Saturd....
Agent Mastermind Saturd....
Today's Jupiter New Hom....
Today's Jupiter New Hom....
Which Renovations Make ....
West Palm Beach Rental ....
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....
Selling Your Jupiter Ho....
Selling Your Jupiter Ho....
Fannie Mae Ending HomeP....
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)
Another Business Booste....
Palm Beach County Listi....
VA May Be the Best Loan....
Palm Beach County Listi....
To Buy a Home in West P....
VA May Be the Best Loan....
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....
Homes & Money Newsl....
Homes & Money Newsl....
MMG Weekly: Let it Slow....
Another Business Booste....
Unexpected Influences o....
Unexpected Influences o....
Getting a Loan in West ....
VA May Be the Best Loan....
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....
Child's College Housing....
MMG Weekly: Bonds Not F....
Words you can't afford ....
Preparing for Multiple ....
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....
YOU Magazine : A Home-C....
Palm Beach County Home ....
Palm Beach County Home ....
YOU Magazine : A Home-C....
Getting a Loan With a R....
Getting a Loan With a R....
"All the House is ....
"All the House is ....
Wall St. Crunches Numbe....
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....
Easy Mistakes For First....
Updated: 10-Year ARM Co....
Easy Mistakes For First....
Updated: 10-Year ARM Co....
Palm Beach County Home ....
Most Palm Beach County ....
Another Business Booste....
Proactive Homeowners So....
Selling Your Home Is a ....
Another Business Booste....
Selling Your Home Is a ....
Palm Beach County Home ....
Beyond Impulse: an West....
Proactive Homeowners So....
Buying a House Can Mean....
Most Palm Beach County ....
MMG Weekly: Taper Fears....
Beyond Impulse: an West....
Buying a House Can Mean....
Taking Active Steps Can....
New Home Choices Benefi....
MMG Weekly: Taper Fears....
Taking Active Steps Can....
New Home Choices Benefi....
Happy Holidays
Happy Holidays
Inspection Can Prevent ....
MMG Weekly: Good News R....
Inspection Can Prevent ....
Palm Beach County Selle....
MMG Weekly: Good News R....
Readying Your Home for ....
Readying Your Home for ....
FHA News Alert: 2014 Lo....
Palm Beach County Selle....
FHA News Alert: 2014 Lo....
Mistakes to Avoid As a ....
Mistakes to Avoid As a ....
YOU Magazine: Allow You....
YOU Magazine: Allow You....
Selling Your Home in Pa....
Selling Your Home in Pa....
Upgrades That Can Actua....
Upgrades That Can Actua....
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 - Property Websites