If you’ve recently gone through a foreclosure, you may already be wondering how soon you’ll be able to buy another Santa Cruz home. You enjoy the pride of homeownership, and you want to buy as soon as possible so that you can take advantage of today’s lower prices.
Here are answers to two commonly asked questions about buying a home after foreclosure:
How soon can we buy a home after a foreclosure?
Fannie Mae and Freddie Mac impose the following waiting periods on conventional home loans, depending on the type of foreclosure you went through:
• Buying after a foreclosure: The waiting period is 5 to 7 years.
• Buying after a foreclosure with extenuating circumstances: The waiting period is 3 to 7 years.
• Buying after a deed-in-lieu of foreclosure: The waiting period is 4 to 7 years.
• Buying after a deed-in-lieu of foreclosure with extenuating circumstances: The waiting period is 2 to 7 years.
Fannie Mae and Freddie Mac frequently issue new guidelines. The above policies were in effect as of August 1, 2008. Waiting periods for FHA loans and VA loans are somewhat shorter than Fannie Mae’s waiting periods.
What can we do during that waiting period to prepare us for success when buying a Santa Cruz home?
When you go through a full foreclosure, expect your credit score to decline by 140 to 150 points. You’ll also have negative marks from the foreclosure on your credit report for as long as seven years, which makes it more difficult to buy a home. The number one thing you need to do to prepare to buy another home is to fix your finances:
• Reduce or pay off your debt.
• Pay every bill on time, every time.
• Eliminate unnecessary monthly expenses.
• Dispute any mistakes on your credit report.
• Save for a future down payment.
If you’re in the market to buy a Santa Cruz home or would like more information about preparing to buy a home, I can help. Give me a call at 831.662.6522 or email me at Lauren@LaurenSpencer.com.
For additional information please visit my homepage at www.MySantaCruzRealEstate.com.