Now that the housing and mortgage crisis is a few years old I’m often asked “how long do I have to wait before I can buy or refinance a house again”?
The following chart can be used as a guideline to help you:
|
Derogatory Item |
Conventional Loan Waiting Period |
Minimum Down for New Conventional Loan |
FHA Loan Waiting Period |
|
Foreclosure |
7 Years
3 Years with extenuating Circumstances |
10% Down |
3 Years
1 – 2 Years with Extenuating Circumstances |
|
Short Sale or Deed In Lieu |
7 Years
4 Years 2 Years |
10% 20% |
3 Years
1 Year if no late payments |
|
Bankruptcy – Chapter 7 |
4 Years from Discharge |
5% – 20% depending on Credit Score, Mortgage Ins Requirements & Loan Amt. | 2 Years
1-2 Years with Extenuating Circumstances |
|
Bankruptcy – Chapter 13 |
2 Years with Extenuating Circumstances | 5% – 20% depending on Credit Score, Mortgage Ins Requirements & Loan Amt. | 1 Year if debts are paid back on schedule |
Notes: Waiting periods are from date of foreclosure sale, short sale or discharge of bankruptcy. Lenders may impose minimum credit scores Conventional loans are loans originated to be sold to Fannie Mae or Freddie Mac. FHA loans are insured by the government. Minimum down payments are 3.5 percent. “Extenuating circumstances” are credible excuses with a very low probability of recurrence. Typically they would a combination of factors such as: extended illness, serious accident, death in the family, victim of fraud, etc.
If you have experienced a Foreclosure, Short Sale or Bankruptcy, I recommend a consultation with a mortgage professional well in advance of buying a new home. This allows time to review and monitor your credit and to develop a plan that might expedite the process after meeting the minimum waiting period.
Will Higher Conforming Loan Limits be Reinstated to $729,750?
There is renewed hope that these limits may be extended in certain high-cost real estate markets. Late last week, the Senate passed an amendment to an appropriation bill that would reinstate the conforming loan limits back to $729,750 through December 2013. The Senate and House now are working out the differences between the Senate and the House bill, which the House passed earlier this year.
Congress never should have allowed these limits to expire in the first place. We don’t know how much time this will take or if it will even happen so for now its business as usual with the cap of $625,500.
New Refinance Plan for Underwater Homeowners
There’s has been lots of press this week about the enhancements to the Governments Home Affordable Refinance Program. The details won’t be released until November 15th so I’ll write more about this when all the facts are known. On the surface it appears to me that it’s a little better than the earlier version of this program but still falls short of helping enough underwater homeowners refinance. It remains to be seen if lenders will still be allowed to impose their own stricter guidelines. I say the Government should not allow that and if they do the success of this program will be very limited.
By Rick Cirelli
