CAN I GET A LOAN AFTER FORECLOSURE?

CAN I GET A LOAN AFTER FORECLOSURE?

More than four million homes have been lost to foreclosure since the housing market started its decline. Unfortunately, experts expect many more in the coming years.

When the decline started most of us were not prepared, especially the banks. Mistakes were made and many people were hurt.  Sadly, other than filing for bankruptcy protection, nothing wrecks a borrower’s chances of qualifying for a home loan like a foreclosure.

Fortunately, those distressed homeowners who obtained an approved short sale will fare much better.

Lender’s loan guidelines forbid most lenders from making loans to borrowers with a bankruptcy or foreclosure on their credit record from between two and seven years. Naturally, the circumstances for each foreclosure are different. Those circumstances will affect the borrower’s eligibility accordingly.  Those who were able to maintain, or regain their income levels to the point of remaining current with payments for all obligations other than the mortgage will qualify sooner than will borrowers who were unable to make any of their payments.  Employment history is also an important factor.  The longer a borrower is employed at one company, on in the same line of work, the better.  A two-year, uninterrupted employment period, is an absolute minimum.

Do not expect to qualify for the most competitive interest rates.  Lenders will consider your loan a higher risk and will want a higher yield on their investment to compensate.

The selection of a lender for the new loan will also influence the required wait time.  Government-backed loan programs require a borrower to wait a minimum of three years before loan approval.  Some portfolio lenders, lenders who do not sell their loans and service them for the duration of the loan, can have shorter wait-time requirements.

The best course of action is to select a loan consultant with whom they feel comfortable dealing, explain the specifics of their situation, and allow their consultant to try to find a lender who will approve and fund a loan.  You may learn that you have to wait a little longer.  If so, you can use the time to improve your credit record and put some cash aside for the down payment and closing costs.  Although waiting may not be something you want to do, you may end up better off as a result. 

Select this link for a Mercury News article on this subject:

http://www.mercurynews.com/business/ci_20241918/past-foreclosure-means-waiting-years-new-loan

If you would like your specific situation with a licensed Mortgage Loan Originator in confidence, contact us at (916) 337-0658 or e-mail: Mike@BuyYourVilla.com