Is it Possible to Obtain Home Loan 1 Year After Foreclosure?
No, it’s no longer possible to obtain a home loan 1 year after a foreclosure or short sale. If you’re a former homeowner with a credit history indicating a short sale or foreclosure, you’ll usually have to wait from 3 to 7 years in order to qualify for a home loan. However, there are some circumstances and exceptions to shorten that wait time, but no matter what, loan applicants must keep their credit history clean during this seasoning period.
Nowadays, it is possible to obtain a loan 2 years after foreclosure but in most cases the wait is at least three years. In order to shorten the seasoning period loan applicants must be able to prove hardship as the cause of the foreclosure or short sale. Most might be thinking, yeah right, how am I ever going to prove hardship?
What qualifies as a hardship?
New FHA loan applicants must be able to prove the foreclosure or short sale was caused by an uncontrollable event of some kind. Thi problem caused at least a 20% reduction in income, and the reduction lasted for at least a period of six months.
Obviously, the underwriters aren’t going to just take the applicants word for it and the hardship must be proven and verified. This is where the new loan represnetative must really step to the plate and do their due diligence to prove the hardship.
This process might include an extra review of income tax records, employment verification, and the lender may require the loan applicant to provide some additional documentation to prove their case. The more proof, the better.
Certainly, a wait of 2 or 3 years is much better than 7 years, so this really is good news!
Recap
Typically, loan applicants must wait from 3 to 7 years after experiencing a foreclosure or short sale. That time period can be shortened if applicant is able to prove a verifiable event occurred causing a reduction of income. Applicant MUST maintain good credit history in during the time following the sale of the property.
If you think you might qualify, it is absolutely critical to choose the right real estate professionals for representation. This includes a leader experienced with this subject and a realtor who is also a Certified Distressed Property Expert.
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