Mortgage providers are much more stringent after the fairly recent collapse of the system. People with near perfect credit are being turned down for loans in some cases.
However, that doesnâ€™t mean that you should dismiss any dreams of one-day becoming a home owner again. There is a definite chance to buy a home in your future if you take the proper steps and understand how the system now works.
There are definitely waiting periods that you will have to wait depending upon your individual circumstances and no two loans are exactly alike. Fannie Mae is basically the largest and most powerful mortgage buyer in the mortgage loan industry. Their guidelines are often the guidelines used by most lenders and can provide guidance for those who wonder when they can begin to consider getting back into a home.
While nothing is set in stone and, as said earlier, every case is handled individually these guidelines are a good place to start as to when most lenders will once again consider giving you a loan for a home. In general these are the guidelines that should be considered when looking at buying a home after a short sale or foreclosure:
â– Foreclosure: 5-7 years
â– Foreclosure with Extenuating Circumstances: 3-7 years
â– Deed in Lieu of Foreclosure: 4-7 years
â– Deed in Lieu of Foreclosure with Extenuating Circumstances: 2-7 years
â– Short Sale: 2-3 years
In general, most lenders consider the following conditions to fall under extenuating circumstances which led to the loss of your home. Keep in mind that each and every case is different and one personâ€™s job loss/transfer may not be considered as a part of an extenuating circumstance if they also had a long history of late payments. So, again, while these are generally what lenders will consider to be extenuating circumstances they are not the only thing they look at when deciding to give you a second chance on a mortgage.
Extenuating circumstances May Include:
â– Severe Illness
â– Severe Illness of an immediate family member
â– Accident resulting in a severe injury preenting you from working
â– Death of a spouse or child
â– Job transfer
Remember that every person/family is treated different and the circumstances can be similar but not identical. While one family may be given some leniency due to the fact that a child had a severe illness, another family with similar circumstances might also have a history of not paying their bills.
Obviously, if you have two similar circumstances but with slightly different history in each case, the lender will also take the previous financial/credit history into consideration too. While extenuating circumstances can make a difference they are not the only deciding factor in whether or not a lender will consider a loan to a potential buyer.
In most cases lenders have not only a set of guidelines to follow but also will require a sizeable down payment of 20% or more. In some cases they may require only 10%, other cases they may consider a totally different amount; it simply is based upon the lender and the particular case.
You will also need to build up and maintain a good credit rating. Generally a credit rating of good to excellent is going to be required before you will even be considered for a mortgage even without a previous loss of a home due to foreclosure or short sale. If you have a foreclosure or short sale in your past the lender is most likely going to be very strict on a minimum credit score that is acceptable for them to approve your loan.