Ramifications of Foreclosure, Short Sale or Deed-in-lieu-of-foreclosure
Here are some of the ramifications of foreclosure, short sale or deed-in-lieu-of-foreclosure, there are many more like your job, yes employers are checking credit records these days.
Your credit score will be reduced by 200-400 points, short sale a little less 100-200 points.
All forms of foreclosure stay on your credit report for 10 years.
After you have gone through foreclosure, short sale or deed-in-lieu-of-foreclosure there will be what is known as the "waiting period", this period of time varies for each and can be reduced if you had some type of extenuating circumstances that caused the foreclosure:
Waiting Periods to Buy After Foreclosure
* Buying After a Foreclosure
The waiting period is 5 years up to 7 years.
* Buying After a Foreclosure with Extenuating Circumstances
The waiting period is 3 years up to 7 years.
* Buying After a Deed-in-Lieu of Foreclosure
The waiting period is 4 years up to 7 years.
* Buying After a Deed-in-Lieu of Foreclosure with Extenuating Circumstances
The waiting period is 2 years up to 7 years.
* Buying After a Short Sale
The waiting period was just upped from 2 to 3 years. However, if a seller does not have a 60-day late pay, that seller may immediately buy another home. It's a reason to stay current on your payments while the home is on the market as a short sale.
In addition to the waiting period, most loans require a minimum down payment of 10% and a minimum FICO score of 680. The home purchase must also be the principal place of residence, not a rental nor a vacation home.
Lastly, most loan applications will ask the dreaded question "Have you ever been foreclosed on?" this stays with you for life, many think that because it will not show up on the credit report after 10 years they can answer "no", well lying on a loan application is a felony that carries a major jail term, so be aware.
Buy a home after foreclosure expert
A number of steps are being taken to improve the process of Short Sales. Some of the banks are getting a better handle on the process and have more trained staff to deal with the volume. The federal government has come out with some standardization efforts and incentives for the banks also. HAFA is the latest program that went into effect 4-5-2010 and does give most everyone some incentives to complete alternatives to foreclosure. Short Sales are being completed Henry.
I would be glad to consult with you and provide some guidance regarding the process and steps.
The short sale is going to depend on what type of leverage you have with the lender. For example this is an investment property therefore the lender may ask you to pony up some cash for the short fall. They will want to look over your assets to see that there is a true hardship vs. a negative equity sale. If your loan is non-recourse then the lender may be more willing to cooperate and accept a short sale. If your loan is recourse then the lender may be less willing to cooperate. If you have one lien on the property that is less difficult than two or more liens on the property.
The Credit Repair Expert
Good question. Yes, there has been talk that the government is going to require banks to pre-approve the selling price on a short sale to speed up the process of the offer being held up from final bank approval.
In the meantime, Arizona is a non deficiency state, meaning the bank's in a normal mortgage situation are precluded from pursuing the "shorted" balance owed in a short sale.
If I can answer any questions for you, just ask.
Jeff Masich, RealtorÂ®
Arizona Homes and Land
HomeSmart Real Estate