How Soon Can You Buy a Home After a Short Sale or Foreclosure?

You or someone you know lost their home. Once recovered from the gut wrenching experience, the question is will you ever be able to buy a home again?

The short answer is yes. Below is a cheat sheet with the time frames and details.

Conventional Financing

For Foreclosures (home was given back to the bank- no owner participation)

7 years from foreclosure completion date and given back to bank if there were no
extenuating circumstances.

3 years from foreclosure completion date and given back to bank if there was
acceptable extenuating circumstances AND a 10% down payment. Only for
primary owner occupied homes.

For Short Sale (Home sold for less than amount owed) or
Deed in Lieu of Foreclosure (Home returned to lender in exchange for canceling the loan)

7 years from sale date closed and transferred to new owner or transferred back to
bank with less than 10% down payment.

4 years from sale date closed and transferred to new owner or transferred back to
bank with 10% down payment.

2 years from sale date closed and transferred to new owner or transferred back to
bank with 20% down payment.

2 years from sale date closed and transferred to new owner or transferred back to
bank with acceptable extenuating circumstance and 10% down payment.

FHA Financing

For Foreclosures (home was given back to the bank- no owner participation) or
Deed in Lieu of Foreclosure (Home returned to lender in exchange for canceling the loan)

3 years from foreclosure completion date and given back to bank.

12 months to 2 years from date foreclosure completed and transferred back to
bank may be acceptable if the result of extenuating factors.


For Short Sale (Home sold for less than amount owed)

3 years from sale date closed and transferred to new owner.

No waiting period if borrower had no late payments on any mortgages and
consumer debts within the 12 month period prior to the short sale AND they
are not taking advantage of declining market conditions.


Contact me for more info or questions!

REAL ESTATE SNAPSHOT

The real estate opportunities right now are unprecedented.

Distressed properties, also known as short sales and foreclosures, are indeed the bulk of real estate inventory. And, sadly, many home owners have suffered hardships causing them to lose these homes. Additionally, “traditional” sellers are bearing the brunt of the market as their home values have been driven down alongside the others.

But for investors, first-time buyers and those with the ability to move up, the market couldn't be better. Interest rates are hovering around 4 ¼ to 4 ½ % right now for 30 year fixed rate loans. That’s outstanding.

Now there are some out there who want to wait to buy and see if prices go down some more. The average sale prices of single family homes in Ventura dropped about 5% over the last year, so that may seem like a good plan at first blush. But here’s some food for thought...

Since the entry level homes are driving the market, let’s say we’re looking at a home for $400,000 with a 10% down payment and a 4.5% interest rate. Your payment (including taxes and insurance) would be about $2324 per month.

Let’s suppose that home values decline by 5% and interest rates go up 1 %. You’re buying the same home for $380,000 (a 5% lower price) with a 10% down payment and a 5.5% interest rate. Your payment would now be about $2417 per month. Hmmm.

I left my crystal ball at home, but I’d be willing to bet interest rates will go up before anything remarkable transpires in home values. My counsel would be to take advantage if you can. We won’t know the bottom has hit until it’s already in the past.