Experiencing bankruptcy and foreclosure does not entirely rule out getting a property in the future. There are particular requirements that you must know about. Below, we provide a basic understanding of how quickly you might purchase another property post- foreclosure and bankruptcy.
Home Buying Ability Post- Foreclosure
A foreclosure relates to defaulting on a home loan. Naturally, you should not be able to directly purchase another piece of real estate. Another mortgage company will not think that you would stay up to date with another home loan. For conventional home loans, there is a waiting period of seven years (from the foreclosure date) for approval on another home loan. FHA home loans have a lower 2-3 year wait period. There is also a special FHA Back to Work Program requiring only a 1 year wait period.
Note that this time frame is only one of several underwriting requirements. During that period of time, it is essential that you show good credit practices. Examples are submitting on-time payments, not keeping high balances on your credit cards, not having any accounts sent to collections, etc. Most mortgages require minimum credit scores for loan approval and the foreclosure likely reduced your score quite a bit. These will both demonstrate your credit worthiness and elevate your credit score.
Purchase Another Property Post- Foreclosure and Bankruptcy
If your property was taken in foreclosure AND you completed a bankruptcy, there are 2 applicable waiting periods. Normally, the later of the two applies. However, if the foreclosure was included in the bankruptcy (and the new lender can confirm that), then you may use a shorter waiting period. For conventional home loans, that means four years instead of seven.
Finding Out How Quickly You Might Purchase Another Property Post- Foreclosure And Bankruptcy
All of this can be somewhat confusing. Speak to a mortgage broker to determine what actually applies to you. If you are past the waiting period, the mortgage broker may process a pre-approval. If you do not qualify, he/she may recommend ways to improve your situation.
Meanwhile, at least you know that it is feasible to purchase another property despite going through a foreclosure and bankruptcy. Waiting periods do apply and can vary depending on the type of loan. Furthermore, there are certain programs that may shorten that period of time. Qualifications and features will change over the years, so your mortgage broker is always the best resource for current guidelines.