Obtaining a Mortgage After a Foreclosure, Short Sale or Bankruptcy
Losing a home to foreclosure, short sale or bankruptcy does not mean that you will never be able to obtain another mortgage.

November 05, 2011 /24-7PressRelease/ -- Obtaining a Mortgage After a Foreclosure, Short Sale or Bankruptcy

If, like so many others in these tough economic times, you have found yourself involved in a bankruptcy, foreclosure or short-sale of your home, you may wonder how long it will take before you can enter the housing market again. Rules have tightened in the last three years; however, losing a home does not mean you will never qualify for a mortgage again. When you will qualify for another mortgage varies according to how you lost your home, what type of home loan you are next seeking and other individual circumstances.

The same general rules apply to obtaining another home loan that applied in better economic times. Rebuilding your credit makes a big difference, as does saving for a down payment -- in fact these matter more for you now than it did before losing a home or going through bankruptcy. Rebuilding credit is a matter of paying bills on time, obtaining other credit -- such as a secured credit card, which also must be paid on time every month -- and negotiating payment with collectors regarding existing debt.

The Federal Housing Administration requires a one year wait after a Chapter 13 bankruptcy before a purchaser can qualify for a home loan. The wait increases to two years following a Chapter 7 bankruptcy. Following a foreclosure or short sale, you must wait three years before the FHA will support a new mortgage. On the upside, you can use that time to rebuild credit and save for a down payment, which can reduce monthly mortgage payments. In addition, some lenders offering FHA loans do have stricter requirements, so the wait time, down payment and rate can vary according to your particular lender.

Fannie Mae sets conventional loan standards a bit higher, usually requiring a credit score of 660 or higher. Fannie Mae treats foreclosures and short sales the same, requiring a seven year wait. Extenuating circumstances surrounding the earlier financial trouble can reduce the waiting periods, such as the death of a family's wage earner, but there is no guarantee these circumstances will reduce the wait time.

If you have questions regarding the affects of a foreclosure, bankruptcy or short sale on the ability to purchase a home in the future, contact an experienced bankruptcy attorney to discuss your particular situation.

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