Tuesday, April 20, 2010
4/20/2010 12:31:00 PM | Posted by
Arbor Mortgage
Everyone understands that a foreclosure is bad for your credit. But, how bad? How long before someone will lend to you again? There’s a common misconception that it needs to fall off your credit report all together, which could take 7-10 years. Good news is the wait is actually much shorter than that.
Foreclosure/Short Sale Waiting Periods
Event | Wait for FHA | Wait for VA | Wait for Fannie Mae (FNMA) |
Foreclosure | 3 years | 2 years | 5 years |
Short Sale | 3 years (if late pays) No wait (if no late pays) | 2 years | 2 years (w/ 20% down) 4 years (w/ 10% down) 7 years (w/ less than 10% down) |
**These guidelines are as of the day posted, and are subject to change at any time without notice | |||
Exceptions can be made to gain an approval in a lesser period of time if the foreclosure event was due to extenuating circumstances beyond a borrower’s control. Death of a wage earner, or severe medical issue could possibly fall under that category. Whatever the event, be sure it’s well documented and that your current credit is in good standing.
Now, just because it’s possible, doesn’t mean you can find a lender to approve it. Each lender has their own unique set of guidelines that they enforce on top of the minimum standards set by the FHA, VA and FNMA. Lenders are allowed to set stricter guidelines and many do just that. While FHA may allow loans to those that had no late payments during their short sale, most lenders will not approve it outside 3 years. If your situation is a little outside the box, it may take some extra leg work to find a lender that will consider it.
If you’re still under the minimum wait period before you can buy your next home, then it’s time to work on your credit and savings. Do everything you can during that wait period to save up a decent reserve fund, and make good on any outstanding obligations. Good credit, with a solid pay history, and adequate liquid reserves will make you a much more attractive borrower to a lender that might have to make an exception to get you approved.
And, remember, mortgage guidelines change regularly, so, always do your homework to be sure the programs we’ve listed here are still accurate.
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- Arbor Mortgage
- Arbor Mortgage is a Michigan based mortgage lender that has been providing mortgage solutions for more than a decade. Since 1998, Arbor Mortgage has helped more than 20,000 people purchase or refinance their homes. Arbor offers a variety of mortgage programs including FHA, USDA Rural Development, VA, Conventional and Alternative loans.
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