There are a variety of foreclosure alternatives available to homeowners. And there are also a variety of ways that these alternatives impact your credit.
Fannie Mae has updated the waiting period before a homeowner is eligible for a new mortgage after a foreclosure, short sale or deed-in-lieu. The new Fannie Mae policies favor homeowners who work with their lenders to avoid foreclosure by allowing them to be eligible for a future Fannie Mae loan in a shorter period of time. Below is an idea of the latest requirements to get a new loan after a negative mortgage outcome:
1. Foreclosure: must wait 7 years after a foreclosure to get a new mortgage loan, and must have re-established good credit.
However, under extenuating circumstances (loss of job, serious medical issue, etc.) this period may be reduced to 3 years to less than 7 years, if:
.You have at least 10% down, or more if the loan program calls for a larger minimum down payment.
.The new loan is for the purchase of a principal residence.
2. Bankruptcy – Chapter 7 or 11: need to wait 4 years (2 years possible with extenuating circumstances) from the discharge date, and must have re-established good credit to get a new mortgage loan.
3. Multiple Bankruptcy Filings: wait 5 years if more than one filing within the past 7 years (3 years possible with extenuating circumstances), and must have re-established good credit.
4. Deed-in-Lieu of Foreclosure, Pre-Foreclosure Sale or Short Sale: must wait 2 years with 20% down payment for a new home, and must wait 4 years with a 10% down payment, and must have re-established good credit.
These latest rules are subject to change at any time, so always make sure you check with your mortgage professional for the latest details.
Tags: credit, credit score
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