A Foreclosure & How It Affects You Buying Another Home
Most people do not know that the release date that banks have to go off of is not the date that you are foreclosed upon and they take title from you. The release date is the date that the bank disposes of the property.
It can take a bank months or years to finally sell your property and that is when your waiting period begins. Typically the bank won’t allow you to buy again for another 4 years but there were new rules that Fannie Mae came out:
- Deed-in-Lieu of Forecloure is 2 years with a minimum of 20% down.
- Preforeclosure sale is 4 years with a minimum of 10% down
- A short sale is 7 years and the down payment will depend.
If you can show an extenuating circumstance than all of the above goes to 2 years and a minimum of 10% down. Fannie Mae defines a unique hard ship as:
- is unlikely to re-occur and is not a natural or manmade disaster;
- is temporary in nature or of limited scope, but impacts many borrowers;
- may involve property damage, hazard in the dwelling, or other adverse property conditions;
- creates financial hardship that impacts the ability of the borrower to continue making payments on the mortgage loan;
- may involve uncertainty regarding whether insurance will cover the losses incurred; and
- has been designated as a “unique hardship” by Fannie Mae.
https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2010/svc1011.pdf
FHA requires 3 years and VA is 2 years. The years and guidelines mentioned above are subject to change without notice and can vary from bank to bank.
An example of it taking years would be if your bankruptcy was discharged in January of 2008 and the property wasn’t sold until January 2010 you have to wait 2 years from January of 2010. Just because the property was included in the bankruptcy doesn’t matter.
