Will I be able to buy a house again after foreclosure?
While Foreclosure is generally a difficult decision to make, the good news for those affected is you will be able to purchase a new home again. The reality is, however, that though it’s possible, it usually isn’t without some challenges.
The first challenge that you’ll face when seeking a home loan after foreclosure is the significant damage to your credit. Lenders use your credit score to gauge their risk in offering you a loan. Being that a foreclosure stays on your credit for seven years, most lenders will typically deny your request for a home loan during those years.
Going through a private or portfolio lender may increase your likelihood of being approved for a home loan sooner after foreclosure. However, they too usually impose their own set of standards by which they measure their risk.
Another way to purchase a home within the first seven years following foreclosure is to prove the foreclosure was due to an unexpected qualifying hardship. This could mean a loss of job or personal business failure, or a medical emergency. To do so, lenders will likely require documentation that proves the hardship and a personal letter assuring it will not cause foreclosure again in the future.
While getting an approved home loan sooner than seven years after foreclosure is possible, the chances of it occurring within the first 1-3 years is extremely slim. To some degree or another, almost all lenders impose some extent of a waiting period before approving a home loan following a foreclosure, the minimum could still be as much as two years.
Minimum Waiting Period after Foreclosure to Receive a Mortgage Loan:
- Three years for FHA loans
- Seven years for Fannie Mae/Freddie Mac loans
- Two years for Veterans Affairs loans
- Three years for USDA loans
Trying to purchase a home within the seven years that the foreclosure is on your credit will not only incur some inconveniences, but financial disadvantages as well. If a lender is willing to accept the perceived risk, they’ll likely require higher down payments, and impose higher interest rates.
The most important thing following a foreclosure is to work on improving your credit. Healthy financial habits and making efforts to repairing your credit will allow your credit score to slowly improve over time. When the time comes to take out a new mortgage loan, your healthy credit will ensure purchasing a new home is possible.
If you are considering foreclosure or would like more information on your options following foreclosure, do not hesitate to speak with our experienced foreclosure defense attorneys. To schedule a consultation, contact our office at (702) 998-1188, firstname.lastname@example.org, or by scheduling a consultation online.