Question by roadrunner4854: After foreclosure, how long will it be before I can apply for a new mortgage?
I am being foreclosed on. My wife was unable to work during pregnancy and for a few months after the baby was born. We fell behind on the mortgage and were not able to catch up.
I found another home to buy with owner financing that we can afford. However, the seller wants us to refinance in two years.
We have paid everything on time except the mortgage in foreclosure. We have minimal debt. Credit Card is paid off monthly and our car notes and a small installment loan have always been paid on time.
Will we be able to refinance in two years if we continue to make all payments – including the new owner financed note – on time?
Best answer:
Answer by Beverly S
FHA requires 3 years after the date the home is taken out of your name. Conventional loans are 4 years. Keep in mind the time frame on foreclosures aren’t quick. It could be months after you leave before it’s out of your name.
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Highly doubtful that you would be approved for a mortgage loan only two years after 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.”
You CAN check with a FHA mortgage broker to see if they might not require a full three year wait.
To add:
Owner financing is something you want to run away from.
Stay clear of it. Get the thought out of your head.
The same with rent to own.
Do not get involved in these scams.
Plus, any deal like this will NOT do anything for your credit. Nothing at all.
Rent something cheap. Save up a down payment for a home.
Continue to pay your credit cards in full each month.
Currently there are 2 states trying to make owner financing and rent to own illegal.
There is a reason for this.
Too many to list – just stay away.
You won’t be able to do it in 2 years.
The new owner financed note isn’t likely to apply to your credit anyway.
3-4 years. this is not carved into stone so it can vary.
First DO NOT BLAME THE WIFE FOR BEING PREGO FOR THIS PROBLEM. The reason you lost the house is because you BOTH couldn’t afford it and you didn’t plan ahead by having a savings plan. In addition, maybe as a man in the household you could have taken a part time job or something to make up the difference in income.
2nd, the clock starts AFTER the courts ok the FC. So you have a while before that even starts.
3rd, it will take AT LEAST 3 years, assuming that you can get your credit score up into the mid 600. And this is the rule today. Things are changing and the credit score requirements and timeframes are going up.
Bottomline. YOU WILL NEVER get a loan in 2 years. Sorry