After Foreclosure - Can You Buy Another Home?

By
Mortgage and Lending with Steve Thorne NC Mortgage Experts

It's Been A Roller Coaster RideIf you are one of the millions of families that lost their home in the last couple of years to Foreclosure… you might think…

Been There – Done That

You might not want to own a home again! 

But if you’re one of those folks who truly does want to purchase again, here’s some potentially good news.

USDA says that they will allow you to purchase a new home to owner occupy, after foreclosure if you’ve done the following things:

  • Wait 3 years from the date of the Foreclosure.
  • Re-establish Credit
  • Have Credit Scores that meet the guidelines (as of the date I am writing this, that means you need a 620 score.)

Here’s the other part… you need to DOCUMENT what happened, and why you ended up in a Foreclosure. 

“FHA insured mortgages are generally not available to borrowers whose property was foreclosed on or given a deed-in-lieu of foreclosure within the previous three years. However, if the foreclosure of the borrower’s main residence was the result of extenuating circumstances, an exception may be granted if they have since established good credit…

This does not include the inability to sell a home when transferring from one area to another.”  So you MIGHT be able to buy after two years. 

My “real life” answer to this question is… in today’s credit environment, it’s going to be HARD to get a Bank to loan you money for a home if you had your home foreclosed upon less than 3 years ago.  I know what the guidelines say, but Bank’s do not have to follow guidelines set by FHA. 

FHA does not say you have to have a 620 credit score, but there are VERY few lenders who will allow you to purchase a home without at least a 620 score!  There are some Banks that will not allow you to purchase with FHA if you have ANY lates on ANY accounts in the last 12 months!  That’s not an FHA guideline, that’s a BANK rule, so again – I’d say - you might still be forced to wait 3 years, and have all of your documentation in order!

These guidelines are different from the Fannie Mae / Freddie Mac Conventional Guidelines… And these foreclosure guidelines are changing OFTEN… so I would not rely soly on information you get from an online site. 

Call a loan officer.

If you are considering a mortgage loan in NC, call Steve and Eleanor Thorne, First Financial Services, 919-649-5058 we'd love to help answer your questions!

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Re-Blogged 12 times:

Re-Blogged By Re-Blogged At
  1. Irina Riley 01/28/2011 01:03 PM
  2. Bill Somerset 01/29/2011 07:46 AM
  3. K.C. McLaughlin 01/29/2011 07:57 AM
  4. Jonathan Osman 01/29/2011 09:04 AM
  5. Karen McAlister Jordan 01/29/2011 10:46 AM
  6. Ritu Desai 01/29/2011 11:26 AM
  7. Karen Pierce 01/29/2011 11:55 AM
  8. Todd & Devona - Garrigus Real Estate 01/29/2011 05:14 PM
  9. Margaret Woda 01/30/2011 07:04 AM
  10. Jack Tenold, Reverse Mortgage Specialist Washington | Oregon | California - refinance & purchase 02/01/2011 08:04 PM
  11. Daniel H. Fisher 06/09/2011 06:23 PM
  12. Joyce Kelley 05/26/2013 06:07 PM
Topic:
Lending / Financial
Location:
North Carolina
Groups:
Active Couples
All About Mortgages/Mortgage Networking
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Tags:
fha mortgage loans
usda home loan nc
waiting period after foreclosure
purchasing after foreclosure
foreclosure

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Show All Comments
Ambassador
1,808,642
Jeff Dowler CRS
Solutions Real Estate - Carlsbad, CA
Carlsbad CA Homes for Sale (760) 840-1360

Eleanor - this is really good information for some buyers to have so they do not give up the possiblility of future homeownership. Many certainly got into a situation beyonod their control and should not be denied owning a home again provided they qualify.

Sounds like those who strategically decide to walk away might have a harder time convincing the powers that be that they should own a home again. Who knows.

Jeff

January 29, 2011 04:33 PM #40
Ambassador
963,272
Jason Crouch
Austin Texas Homes, LLC - Austin, TX
Broker - Austin Texas Real Estate (512-796-7653)

Eleanor - Terrific details and information for those who have undergone foreclosure in the past.  Great job!

January 29, 2011 05:28 PM #41
Rainmaker
315,140
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

There is life after foreclosure.

Buyers need the right Realtor and mortgage broker on their side to help navigate the real estate market.

The right mortgage broker will guide the buyer through the credit repair process while keeping track of the changing loan approval guidelines.

January 29, 2011 06:39 PM #42
Ambassador
1,229,122
Erica Ramus
Erica Ramus - Ramus Realty Group - Pottsville, PA - Pottsville, PA
MRE, Schuylkill County PA Real Estate

Great information. Sometimes circumstances are not what they seem on paper. People need to understand what is the back story on these things. 

January 29, 2011 08:13 PM #43
Ambassador
1,229,122
Erica Ramus
Erica Ramus - Ramus Realty Group - Pottsville, PA - Pottsville, PA
MRE, Schuylkill County PA Real Estate

Great information. Sometimes circumstances are not what they seem on paper. People need to understand what is the back story on these things. 

January 29, 2011 08:13 PM #44
Ambassador
1,550,626
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 800-610-7253 DRE01267479 - Costa M

This is really important information.  I think it's important to know the requirements for short sales as well, and yet they keep changing.

January 29, 2011 09:53 PM #45
Rainer
4,220
Jayne Hatcher
Georgia Residential Realty - Smyrna, GA
The Hatcher Team

Really well laid on process, generally we tell people 3-5 years in our market.

January 29, 2011 10:36 PM #46
Rainmaker
158,321
Jay O'Brien
RE/MAX Revolution - Kansas City, MO
Kansas City : Social Media Guy

Great info Eleanor. Thanks for sharing it. These calls from clients with stories like this are getting to be the norm. Hopefully lessons are learned and it will be better the next time around.

 

January 29, 2011 11:09 PM #47
Ambassador
738,737
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Eleanor... not sure how I missed this one.. Excellent post with some great information supplied... and this is one that needs to be posted on Mortgage Myth Busters. ;o)  Again great post here.

jeff belonger

January 29, 2011 11:55 PM #48
Rainmaker
259,554
Liz Lockhart
Riverbend Realty, Cape Girardeau, MO - Cape Girardeau, MO
GRI, Cape Girardeau Real Estate
Eleanor~ This is a question I actually hear pretty often during Cash for Keys exchanges.
January 29, 2011 11:59 PM #49
Ambassador
885,041
Margaret Woda
Long & Foster Real Estate, Inc., Crofton, MD 21114 - Crofton, MD
Maryland Real Estate & Military Relocation

Just re-blogged this, Eleanor.  I didn't disable comments because I targeted the intro to a local community with lots of foreclosures and posted it to Localism for that community.  'Want the locals to see comments from Activerainers.  Hopefully they'll also stop over here.

Let me know if it would be okay to re-blog this on my outside RE Tomato blog, Focus On Crofton.com.  Friday is RE Q&A day.

January 30, 2011 07:40 AM #50
Ambassador
672,359
Lee & Pamela St. Peter
Berkshire Hathaway HomeServices YSU Realty: (919) 645-2522 - Raleigh, NC
Making Connections to Success in Real Estate
Thanks Eleanor for some great info! And for passing along hope to those that fell into tough times. You and Steve do an excellent job helping people get back on the credit track!
January 30, 2011 08:12 PM #51
Rainmaker
181,272
Malik Crichlow
GoodBuy Homes NJ Essex & Union County Real Estate specialist - Maplewood, NJ
Maplewood,SouthOrange,Union Real estate

Eleanor,  I just had this question come up and after speaking with a local Loan officer I was able to get the answers that I needed to provide to my client. Thanks for posting!

January 31, 2011 03:56 PM #52
Rainmaker
1,057,391
Ginny Gorman
Phillips Post Road Realty ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in North Kingstown RI and beyond
Eleanor, me too- how did i miss your blog here...this is great information so clearly stated. Great stuff you are sharing...
January 31, 2011 05:33 PM #53
Rainmaker
148,160
Jack Tenold, Reverse Mortgage Specialist Washington | Oregon | California - refinance & purchase
First Priority Financial NMLS 3257 - Spokane, WA

Hi Eleanor -- this was one of the most informative posts that I have seen in a while.  I am an experienced LO but a relative newcomer to AR.  Thank you for allowing "After Foreclosure - Can I Buy Another Home?" to be re-posted.  This was a very professional piece.  Thanks again! 

February 01, 2011 08:18 PM #54
Rainmaker
398,023
Nevin Williams
Sierra Pacific Mortgage Raleigh - Raleigh, NC
Raleigh Mortgage Pro

Eleanor - These are all great points especially the one about if FHA allows it doesn't mean the lender will.  It is also true that most lenders require at least a 620 FICO on an FHA purchase.  I only have 1 lender that goes down to a 580 and they are very difficult to deal with.

February 14, 2011 04:12 PM #55
Rainmaker
325,145
Esko Kiuru
Bethesda, MD

Eleanor,

As banks get on a more solid footing again they'll start easing up on qualifying guidelines that will also help those folks with foreclosure on their records.

 

March 11, 2011 09:12 PM #56
Anonymous
Anonymous
alison

I understood that if you foreclosed with Fannie Mae/FM, was homsteaded, paid into PMI, and were laid off due to the economical crisis that you were covered under the 2009-2012 act - that an individual could buy an affordable home within two years with no discrimination?? What happened to that??

 

fiffig40@yahoo.com

July 19, 2011 09:03 AM #57
Rainer
3,788
Terri Club
Allentown, AZ

I had a client who wanted to buy a home in Arizona, but he had a foreclosure.  After researching the web I found a loan program at www.cfsflex.com, they allow a mortgage after a foreclosure.  There is no waiting period.  Good to see lending options coming back.

April 21, 2013 10:28 AM #58
Anonymous
Anonymous
Deidre

I am curious Terri, is there any program that you know of in Florida similar to the www.cfsflex.com to purchase a home after a deed in lieu of foreclosure? 

April 21, 2013 01:06 PM #59
Anonymous
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Eleanor Thorne

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