Foreclosure

by Billy Roberts
(Culvert County)

I have a couple of questions. How long do I have to patiently wait after a foreclosure to purchase another home? Is this waiting period a long one or a short one?

---ANSWER---

Unfortunately, it is a long time if you are looking for a mortgage. The foreclosure stays on your credit report for many years like a bankruptcy. Lenders will see it and will shy away from you.

You are looking at a minimum of 5 to 7 years to qualify for a mortgage.

Some have been able to shorten this from 2 to 3 years with documented extenuating circumstances.

Of course, if you are buying on a land contract or paying cash, you do not have to wait at all.

What are Documented Extenuating Circumstances?

These can vary between the different lenders like Fannie Mae and FHA. Here are a few examples:

• Death of major wage earner.
  
• Illness of major wage earner.
  
• Accident resulting in severe injury to major wage earner.
  

In general, these would be things that happen to you over which you have no control. You would need documentation to prove this like a death certificate, medical records, letters from your employer, etc.

These extenuating circumstances are judged on a case by case basis.

Make Use of the Wait Time

But if you don't have extenuating circumstances, all is not lost. Make use of the time to:

• Work on rebuilding your credit. You will need to show you have improved your situation by displaying a good credit score. So take the time to improve your payment history.



• Save for a down payment. Since the required down payment may be higher, plan for it and start a saving plan now. That way you will be ready after the wait time.

So you may need to rent or lease for a time while you wait.

Jeff