Fannie Mae (conventional loans) require a 5 year span and at that time allows for a borrower with a 680 FICO score to obtain a loan on a primary residence with 10% down. After 7 years, a borrower is subject to standard financing rules.
The long term tax or legal implications of whether this home is a primary residence, second home or investment property is best answered by an attorney.
I do not know your situation, and if you are in distress, I am sorry and hope that you can find a way to save your home. If you are not in a distressed situation, I hope you do not opt for a strategic foreclosure as a financial maneuver.
In addition to the legal and tax ramifications, it is harmful to communities and our housing recovery. Some families are experiencing horrific challenges that are forcing them into unwanted situations, like foreclosure. There are efforts underway to help those in need, but these efforts are hindered because they have to spend so much time sorting out those with need from those trying to exploit of the system.
Now there is good news and bad on top of that: the good is even with the item on your credit report different lending industries look at aging differently and the mortgage industry is looking for a 5 to 7 year maturity on a foreclosure before they will consider you for a mortgage, the bad is foreclosure will never leave you it is a question on most loan applications and if you answer no even when it is no longer on your credit report you will have committed a felony that requires a 5 minimum year jail term.
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.
Hope this helps
Buy a home after foreclosure expert
In the end if you go into foreclosure you will have to live with that decision. It could include such consequences as fining a rental house very difficult and jobs harder to find as your credit score is bad.
Depending on the state and loan papers the bank could even come after you for the difference that you still owe.
I am confused. You stated the seller sold through short sale and foreclosure records state paid/settled. I am assuming that the seller received foreclosure notice, but managed to sell through short sale before they were foreclosed upon. Then that would mean they are recovering from a short sale, not a foreclosure in which case most of the previous answers are correct as is my information................short sale is far less devastating to your credit than a foreclosure.
Best of Luck!
ERA Tom Grizzard Realty
Spirit .. Chin up There is always HOPE
Dave & Lisa
"CNNMoney.com reports that Fair Isaac (which developed FICO scores) has come public with â€œestimates of point-score declines following mortgage delinquency problems.â€
" According to Fair Isaac, here is the credit score docking for mortgage delinquency:"
* 30 days late: 40 â€“ 110 points
* 90 days late: 70 â€“ 135 points
* Foreclosure, short sale or deed-in-lieu: 85 â€“ 160
* Bankruptcy: 130 â€“ 240
All the Very Best
Tom you got our thumbs up on this one!!1
Dave & Lisa
If you haven't gone through foreclosure, the following information may be helpful to you:
1. Reinstatement - bring the loan current
2. Forebearance - Temporary repayment plan
3. Refinance - new loan with a reduction in month payments
4. Loan Modification - Modify original loan terms
5. Rent the property out - Must make loan current
6. Sell the property: Use equity to pay off the difference
7. Short Sale : Negotiate with the bank to accfept sale under loan balance amount.
8. Deed in lieu of foreclosure "friendly foreclosure"
9. Bankruptcy: Will stall foreclosure, not prevent it.
While short sales do usually take some time to get them done, many are very successful!
They include but are not limited to:
Just one of these is reason enough to avoid foreclosure at all costs.
I believe we will be seeing banks being more lenient in years to come on people with past foreclosures than ever before. It will cause your credit score to plung but it will come back very sloooooowllllyyyyyyyy.
You will most likely have 7 - 10 years to battle that demon. The "F" word could haunt you the rest of your life with certain applications that may ask you questions like, "have you had a foreclosure or ever filed bankruptcy?"
A "short sale" or a "in-lieu-of" would both be much better options if you can.
Sarah Garrett, Realtor
ALLIANCE REALTOR GROUP
"Chosen Best in Client Satisfaction 2006-2009" by Gulfshore Life Magazine
One that comes to mind was about a year and half ago and he was our Buyer, he had a foreclosure about two and half yr old foreclosure. It was a fha loan
banking like we said changes all the time. What is a rule this year. may not be in the next few years. everything changes. Currently they will stay strick on the lending until some of the foreclosures are cleared out.
We already know people who were foreclosed on in the past and 3 yrs after foreclosure they bought a home
Whats the down side to this well they had to take a higher interest rate and put down 10%
Now we also know that sometimes the bank will take back the property in lieu of foreclosure, please check with your bank if you want to do something like this and make sure above all it's in writing before turning your home over to the banks..
All this will depend on your bank.
Remember mortgage,credit and the like change all the time. Back in the mid 80's my family had a house with a fixed rate of 14%
A few years ago you could get a loan with no money down and the owner paying all closing costs.
So nothing in the credit/bankiing industry is written in stone
Credit isn't so hard to rebuild look for credit companies that don't check your credit history but due report to the credit bureau's such as fingerhut,shopnow.com etc. please please read up on companies such as these before giving you name etc to then not all are honest sorry to say.
All the best
Dave & Lisa