More than 9.2 million Americans lost their homes to foreclosure between 2006 and 2014, according to the National Association of Realtors. For many of those individuals, enough time has passed that they may once again qualify for another mortgage.
How long you have to wait varies by the program. Generally, you will need to wait seven years after a foreclosure or short sale to qualify for a conventional mortgage, three years to get a Federal Housing Administration or U.S. Department of Agriculture loan and two years to get a loan backed by the U.S. Department of Veterans Affairs.
But those time periods can be shortened to as little as one year for a VA or FHA loan and three years for a conventional loan, if borrowers can demonstrate their defaults were the result of a significant hardship from which they have now recovered.
Here are five tips to remember when seeking a mortgage after a foreclosure or short sale:
Your lender will see a different credit report. The report lenders pull when you apply for a mortgage is not the same report you receive from servicers that provide credit reports to consumers. Consumers are often provided with a “stepped-down version.” The credit score is not the end all, be all. There are other factors that can potentially slow the loan. You can figure at least 620 is needed for a conventional mortgage and 580 is necessary for an FHA loan.
On-time payments are important. Re-establishing your credit is one of the most important qualifiers for getting a mortgage after a foreclosure or short sale. Lenders want to do everything they can to avoid lending to someone who will default, again- so they look closely at your bill payment history since the foreclosure.
You will need to demonstrate job stability. If you have a traditional job for which you receive a W-2 form, your lender will verify your income with your employer. People who work several part-time jobs or are self-employed, will face additional scrutiny and will have to demonstrate their income with several years of tax returns and additional documentation.
You will need to document everything. Since the housing crisis, the documentation required for mortgages has increased significantly. Anything a customer puts on the mortgage application will be verified, particularly financial information.
Not all lenders are the same. Each lender has different requirements. There is no one size fits all when it comes to mortgage lender requirements. The basic guidelines are set by FHA, VA, USDA, Fannie Mae and Freddie Mac, but individual lenders and even individual underwriters may interpret these in different ways.
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Choosing the right attorney can make the difference between whether or not you can keep your home. A well-qualified Miami foreclosure defense attorney will not only help you keep your home, but they will be able to negotiate a loan that has payments you can afford. Miami foreclosure defense attorney Timothy Kingcade has helped many facing foreclosure alleviate their stress by letting them stay in their homes for at least another year, allowing them to re-organize their lives. If you have any questions on the topic of foreclosure please feel free to contact me at (305) 285-9100. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.