I have a previous BK (discharged 02/2007) and a foreclosure (10/2006). Am I ever going to be eligible for?

Asked by Jennifer, Colorado Springs, CO Thu Jul 3, 2008

another new home loan? Would it be best to try to buy a less expensive foreclosed home in my area? Does HUD offer loans to purchase their homes?

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Brian L. A.…, Agent, Colorado Springs, CO
Thu Jul 3, 2008
Hi Jennifer :o)

Let me first say that you are not alone. I have seen many good people over the years who have gone through what you are going through and we are very lucky to live in a country that believes in giving people second chances if they earn it.

The short answer is that if you are responsible about rebuilding your credit status, you can eventually be qualified for home financing again.

Because each person and situation differ, credit and loan specialists disagree on exactly how long it takes to rebuild a good credit, but the soonest I have seen someone qualify for a home loan after a foreclosure was 18 months.

In your case the bankruptcy iin 2-07 also wiped out most if not all of your previous debt, but with all the bankruptcys and foreclosures in todays market the lending guidelines have become very tight, so what yo uhave done to rebuild your credit worthiness since the foreclosure and bankruptcy becomes very important.

I have several credit and loan specialists who I have worked with successfully over the years and trust who could advise you as to what you would need to do to repair your credit. Feel free to contact me through the website or my info below and I will be happy to refer you to them.

Brian L. A. Wess
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Jariah Walker, Agent, Colorado Springs, CO
Thu Jul 3, 2008
I have to agree with Brian. As long as you work towards it, you can get back to where you want to be. First things first. You have to find the reason why you got to the point that you did. It's best to find (and correct) these issues while developing new habits that will lead you into property ownership once again. This is an opportunity for you to start with a clean slate. Put aside 10% of everything you earn, live below your means and make all of your payments on time.
Web Reference:  http://www.wamrealtors.com
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Other/Just L…, , Fleming Fitch Grant, Holly Hill, FL
Thu Jul 3, 2008
"Am I ever going to be eligible for another new home loan?"

Short answer: Yes.

Lending answer:
There are two sets of guidelines you must satsify: (1) Fannie Mae/Freddie Mac, the government sponsored entities that purchase loans from banks, and (2) the bank's own guidelines. Fannie & Freddie are the more important.

It all depends on "seasoning" time - the time since your bankruptcy was discharged and the time since the foreclosure was satisfied. Bankruptcy seasoning begins in the month following the Court ordered discharge. Foreclosure seasoning begins the month following payoff of the foreclosure (typically when the property is sold at auction)

Fannie Mae and Freddie mac count seasoning time two ways: You must wait 5 years after a foreclosure on a Primary Residence or 7 years after a foreclosure on a Second Home or Investment property.

For a bankruptcy, you must wait for 2 years after discharge for a Chapter 13 or 4 years after discharge of a Chapter 7 or dismissal of a Chapter 13. Note the difference between "discharge" and "dismissal" on Chp13 BKs.

Sounds like you might be eligible for a Fannie/Freddie backed loan as early as Nov 1, 2010.

FHA requires 2 years seasoning since bankruptcy discharge and 3 years since foreclosure completion. You might be eligible for an FHA insured loan Mar 1, 2009.

1.) Lenders are terrified of risk at present. Although Fannie/Freddie or FHA guidelines might say yes, it's up to the lender to agree. Many lenders have guidelines more restrictive than Fannie/Freddie and FHA.

2.) Guidelines change. Fannie just implemented the new seasoning times on foreclosure effective June 1 of this year. Prior to that the seasoning time on foreclosure was 4 years for all property types.

You might also consider subprime loans (there are still a couple of lenders left), equity only loans (high rates - 12%+ fees and prepay) or seller financing.

A good Realtor can help you with seller financing. This would be your best option if you must buy now.
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