How Long Before You Can Buy After Foreclosure?
Post by : Sally Lawrence
Category: Home Buyers, Home Sellers, Real Estate Info
After foreclosure: How long until you can buy again?
The short answer is: it depends. If you are a Tehachapi or Kern County homeowner that is in foreclosure or has already lost their house, you may be able to purchase a home again is 2 to 7 years.
Getting a mortgage to finance a home after foreclosure is possible for most homeowners. If you defaulted on your mortgage due to economic hardships, such as job loss, you may receive approval for another mortgage in as little as two years. If you chose to engage in a strategic default (intentionally not meeting your mortgage obligations although you have the financial means to do so), it can take up to seven years to get approved.
Points to remember:
- Lenders use several methods to determine whether to grant mortgages, including the how much money you have saved; your employment history; and your payment history.
- Lenders may be more willing to finance a mortgage for a borrower who defaulted on their mortgage as a result of factors beyond their control.
- If you are thinking about a strategic default, you should know that future loan underwriters will scrutinize your entire credit history very closely. Some homeowners who strategically default believe they can raise their FICO scores by paying their others bills on time. If the new lender determines the borrower strategically defaulted on their previous mortgage, the repaired credit score will not overshadow the walkaway.
- Although not impossible for strategic defaulters to finance another home purchase, it likely will be more difficult. Lenders may ask for down payments of 30 percent or more to provide sufficient collateral to enable the bank to recoup most of its money in a foreclosure. These borrowers also may be charged higher interest rates, even above the levels other borrowers with similar credit scores would receive.
Read CNN’s take on this story, by clicking this link.