Hey Real Estate Boys! How goes it on this bright and cheeriest of days? There is no such thing as a bad Saturday in my book. OK, a few years ago “I was much older then, I’m younger than that now” and had just met my future wife. I was rolling in cash, fast cars, fancy dinners and incredible weekends here, there and everywhere. We didn’t think twice, it was alright. But always, when the credit card bill arrived it got paid. Rent, then was also paid on time every month. In early 2005 we got married and first thing we did, no after that first thing, we bought one of the homes I was helping to build. About 18 months after we purchased things turned south. By the end of 2006 I was unemployed and my wife got her hours cut. Yep, we began having problems paying our bills. We hung on for another 18 months and for a Christmas present to the both of us we filed Chapter 7 Bankruptcy. Yeah, Merry Christmas and Happy New Year. So the question is, how long do we have to wait to try our hand at the American Dream again?
John W. Harding
John W., it is really a pleasure to meet and hear from you today. We really appreciate your question. There are a lot of buyers out there who should be asking the same one. As the crash in 2005 and 2006 changed lives and the world, the financial world has changed the rules again, maybe adjusted is a better term and for once they did some good.
Back a few years ago if a family hit hard times and filed for BK or their home was lost to foreclosure they became renters and almost second class citizens. In many cases it would take 5 to 7 years before a bank would even look at loaning the family money again. Seven years is a long time in the life of a family. To put it in perspective, one of the kids say is in the 5th grade. By the time he or she graduates from high school and maybe goes off to college Mom and Dad can finally think about buying a house again. Little Johnny or Jonnie can’t remember their parents ever owning a home. Very sad.
Today our lenders have a new set of rules to work with on BKs, foreclosures etc. Before you start to jump up and down and begin to go out and buy a house, PLEASE go talk to a local lender and get pre-approved for a loan. Then go party.
Here’s a quick overview of the new rules. If you filed Chapter 7 bankruptcy you’ll have wait only 2 years now and if you can prove extenuating circumstances maybe only 12 months if you qualify for a FHA or VA loan. If you want to go with a conventional loan you’ll need to wait 4 years from discharge.
If foreclosure was in your past then for an FHA you need to wait 3 years. VA again, 2 years. Conventional loans are not so nice yet, they’ll make a buyer wait 7 years. If you did a foreclosure and then BK you might get lucky and be good to go after 2 years.
Those ugly short sales, boy are we glad for the most part they are almost a thing of the past. For FHA there may be no waiting IF you did make payments on time for the last 12 months you were in the house. Or 3 years if you did not make prompt payments. Like I said, you need to go talk to a lender. If you go VA there is no waiting period. Conventional 4 years unless you have extenuating circumstances.
If you, like millions of home owners, tried loan modification programs and wish to get an FHA or VA loan you’ll need 12 months of satisfactory mortgage ratings. If you’re headed to the Conventional loan there is no waiting period.
So John W., before you get any older than you are right now call one of our great local lenders and make an appointment to sit down and see if you can get your American Dream again.
Next week our plan is to have interviewed a company that helps individuals repair their credit. Yeah, there are good and bad companies out there and for a fee they help you get your FICO scores to levels that meet the standards lenders require for a home loan.
Until then folks.