Considering buying a home again after a foreclosure or short sale?

[infobox color=”red”]THIS IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE A COMMITMENT TO LEND.[/infobox]

One thing the top producing agents in St. Louis have in common is that they are always thirsty for more knowledge to help them advocate for their clients. This mortgage question comes to us from our CWE neighbor and RE/MAX agent, Dean Porter:

“What kinds of loan programs are available for buyers that are recovering from a short sale or foreclosure?”

GREAT question and a really common scenario these days.  Here are the high-level requirements, but also keep in mind that every lender will have many, more specific underwriting requirements as they apply to the loan program.  Even so, reacquiring the tax benefits and a safe long-term asset make this an exercise worth going through even if it takes a while.  I often work with clients for a year or more to help them position properly before taking this step, so feel free to contact me to begin planning for your re-entry into home ownership.

The following benchmarks are subject to change and only valid if you have had ZERO derogatory marks on your credit report since the short sale or foreclosure.

  • The two biggest factors that will affect your rate are credit scores at the time of application and the amount of downpayment.
  • Two years after short sale or foreclosure, you may qualify if you have a 20% downpayment.
  • Three years after short sale or foreclosure, you may qualify for a VA or FHA purchase loan program if you meet their criteria.
  • Four years after short sale or foreclosure, you may qualify if you have a 10% downpayment.
  • Seven years after short sale or foreclosure, you may qualify for conventional loan programs per their normal guidelines.
  • Your downpayment may be in the form of a gift.  This will reduce (but not eliminate) the need to document your source of downpayment funds.

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Agents: Would you like to use this content in your blog or newsletter? Go ahead! Simply insert the source as “Trina Hart Nichols, Senior Mortgage Advisor at Premiere Residential Mortgage, Inc.” and link back to http://www.prmstl.com for limited license and loads of good karma.

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Written by Trina Hart Nichols

A 13-year veteran of the mortgage and banking industries, her attention to detail and understanding of the internal underwriting processes of our many lenders make her an expert in delivering quick, "no-surprises" experiences for her clients, from the initial interview all the way through to closing. NMLS ID #553927.

Website: http://www.prmstl.com