One of my favorite an most knowledgable lenders sent me this today and with permission I am sharing with others. Time lines are forever changing in the mortgage industry and this answers the frequently asked question about when a home purchaser can requalify for a loan. It also gives an excellent suggestion on keeping in touch with these buyers through this waiting period. Hope you also find it helpful.
How Long Do Potential Buyers Need To Wait After A Bankruptcy, Foreclosure Or Short Sale Before Obtaining Financing?
There is hope for those people who lost a home to a foreclosure or a short sale. A borrower can qualify for a new purchase three years after a short sale or foreclosure using FHA financing. A great opportunity to build business for the future is to ensure you are counseling your short sellers today about the re-establishment of credit. By keeping these
clients in your database and staying in touch you can contact these people in 36 months for a new purchase. Time flies and before you know it you will be assisting these clients again.
Many of today's short sellers were making large monthly mortgage payments prior to their short sale or foreclosure. Its unlikely home prices will be much higher in three years than they are now. Many of these clients will be able to buy a home similar to the one they lost for a payment 30% less than they were previously paying. By building a database NOW of potential future buyers, you are building success and business for the future! If you have a client committed to rebuilding their credit, continue to "drip" on them. Stay in contact with these clients and build an annuity business down the road.
CONVENTIONAL
♦ Chapter 7 Bankruptcy ~ 4 years from discharge date
♦ Chapter 13 Bankruptcy ~ 2 years from discharge date
♦ Foreclosure ~ 7 years from completion date
♦ Deed-In-Lieu of Foreclosure ~ 2 years from completion date 20% down
♦ Short Sale ~ 2 years from completion date
FHA
♦ Chapter 7 Bankruptcy ~ 2 years from discharge date
♦ Chapter 13 Bankruptcy ~ 1 year of the payout must elapse & payment performance must be satisfactory - buyer must receive permission from the court to enter into a mortgage
♦ Foreclosure ~ 3 years from completion date
♦ Short Sale ~ 1 year from completion date if the borrower was current at the time of the
short sale and all installment payments for a 12 month period ~ 3 years from completion date if in default at time of short sale
VA
♦ Chapter 7 Bankruptcy ~ 2 years from discharge date
♦ Chapter 13 Bankruptcy ~ 1 year of the payout must elapse & payment performance must be satisfactory - buyer must receive permission from the court to enter into a mortgage
♦ Foreclosure ~ 2 years from completion date
♦ Short Sale ~ No specific information on this yet, assume foreclosure rule of 2 years
Reputation and Experience count. If I can be of any assistance in helping you position these sellers for the future, feel free to contact me at 770-350-9338.
Ron Draluck
Certified Mortgage Planner
Fidelity Mortgage
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