When Can You Buy Real Estate in California After Foreclosure or Short Sale 2/8/2013

When Can You Buy Real Estate in California After Foreclosure or Short Sale 2/8/2013

Foreclosure-Home-w-Sign_2If you lost your Bay Area home due to foreclosure, you should not give up on the dream of owning a new home. The good news is that a number of guidelines have changed, which may allow  you an opportunity to buy that new home sooner than you think.

Guidelines

There are a few guidelines that lenders follow to determine when you’ll qualify for financing after foreclosure. Arming yourself with this information will prepare you qualify again for a mortgage.

Foreclosure With Extenuating Circumstances

Generally, lenders will take into consideration any extenuating circumstances surrounding the foreclosure on your California real estate.

Was there a death or illness that prevented you from earning money to pay your mortgage? Did you have a job transfer that came with a steep pay cut? Were you severely injured and temporarily disabled as a result? There may be products on which lenders can make exceptions and help you obtain home ownership again.

You can add a memo or in lender terms an LOE (letter of explanation) that explains any lapses in credit worthiness to potential lenders. This report can be as long or as short as needed. The majority of lenders I use through our bank will require documentation or paper trail, that supports the letter  and strengthens the letter.

Many lenders will shorten the waiting period if provided with documented extenuating circumstances. Traditionally the waiting period after a foreclosure has been seven years. However, these waiting period guidelines may change and you would be best served by getting up to date information which I monitor daily.

As it stands today 02/08/2013

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Deed-in-Lieu of Foreclosure and Short Sale

You may be wondering what the waiting period for financing is if you have exercised a deed-in-lieu of foreclosure or successfully negotiated a short sale. Fortunately many lenders offer options if you were able to avoid an actual foreclosure and depending on how it reports on your credit report.

Traditionally the waiting period for a deed-in-lieu of foreclosure can be four to seven years. If there were special circumstances surrounding the transaction, you might be able to qualify in as little as two years. The lender may have certain down payment or credit score requirements as a condition of approval.

Getting financing after a short sale generally has the shortest waiting time before qualifying for a new home loan. Generally the lender will only require a two-year waiting period before they’ll approve financing. Once again, a call to a licensed mortgage professional will give you the most up-to-date information.

The good news about financing after foreclosure is that it is possible. Your dreams of owning a home can be realized even if  you have experienced a foreclosure in your past.

I’m Here to Help You With Your Purchase or Refinance in 2013

I love to work with my Bay Area readers that find my information on the Mortgage and Housing Market helpful in your decision making process. As a Mortgage Planner at Vintage Mortgage Group in Pleasanton, I am in a unique position to help you capitalize on historically low interest rates in 2012. Contact me below today for a free consultation.

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