Credit Repair

HOMEOWNERSHIP AFTER FORECLOSURE, BANKRUPTCY OR SHORT SALE

Because of the housing boom and bust that occurred during the last decade, there are around eight million people today who have lost their home due to foreclosure, short sale, or bankruptcy.

I love working with these returning buyers – they’ve already experienced owning a home, are familiar with the processes involved, and understand the benefits of buying a house once again.

In case you’re a returning buyer, here are a few important things to keep in mind before you buy a home:

Go through the waiting period

It’s common for returning buyers to go through a waiting period after a foreclosure. These wait periods can vary in length, as some lenders provide different guidelines.

The Federal Housing Administration or FHA requires borrowers to wait for three years before they can obtain a new FHA loan – I make loans that follow this guideline.

It’s also important to remember that a waiting period does not begin unless the foreclosure is completed, so moving out of the house or mailing the keys to the lender doesn’t necessarily speed things up. I look up the details for you to determine if the 3 years are completed.

Repair your credit

If the foreclosure was your only credit impairment, it’s possible to repair your credit faster than potential buyers with other issues on their credit history. You will need to provide a letter explaining the circumstances that led to your foreclosure or short sale and provide documentation that supports your letter.

If you have other credit issues, start by settling bank judgments or old accounts in order to ensure your credit history is free from issues. After you do this, it’s only a matter of time, to see your credit improving.

Although foreclosures appear on credit reports for seven years, its negative impact can fade away faster if you take the appropriate steps..

Prepare to make a down payment

There are a lot of returning buyers who aren’t aware that a down payment is required to be able to buy a home. You can  use a loan from the Federal Housing Administration that allows for a down payment of 3.5% of a home’s purchase price. For Conventional loans without permanent mortgage insurance, you need a down payment of 3% and spotless recent credit. I do these loans as well.

Get pre-approved

Getting a loan pre-approval is a smart move, especially for returning buyers. Many sellers and their real estate agents want to know a buyer has been vetted properly before deciding to work with a buyer.

Create a strategic plan

Do not assume you’re ready to buy a house – it’s very important to address any outstanding issues you may still have. Before you start looking for a home, you consult a real estate professional in advance. It’s always a good idea to start early, and working with a real estate agent or a lender is a great way to solidify your plans and have a strategy to follow.

If you’re planning to buy a home after a foreclosure, bankruptcy, or short sale, let’s work together to make it happen! Contact me at (760) 622-5087, or by email at fakri@fakrizubek.com