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How long does one have to wait before he can purchase a new home following a foreclosure?
Fannie Mae, a private US-based mortgage buyer powerhouse, has set new guidelines to protect business interests and to further safeguard its buyers from foreclosure. The fresh set of policies will affect borrowers who have loan applications submitted after August 1, 2008.
What factors affect the waiting period?
A waiting period is the time from the completion of the foreclosure until the time when buyer decides to purchase a new home. Under the new rules, the length of waiting before one is approved for a conventional loan would depend on two factors – the kind of foreclosure and the extenuating circumstances.
Waiting Period under the Different Kinds of Foreclosure
Given these new considerations, the length of time before one can buy a home depends on the kind of foreclosure:
Foreclosure – 5 -7 years
Foreclosure which has extenuating circumstances – 3-7 years
Deed-in-lieu of foreclosure – 4-7 years
Deed-in-lieu of foreclosure with extenuating circumstances – 2-7 years
Short sale – 2 years
Extenuating Circumstances
Factors beyond a person’s control are called documented extenuating circumstances. Fannie Mae lessens the waiting period if a borrower is affected by the following uncontrollable factors:
Death (not the borrower’s)
Job transfer
Sickness
Accidents which result to severe injury
Additional Guidelines
Fannie Mae also has additional guidelines for its buyers. Borrowers should look towards buying a primary place of residence. This means that rental or vacation houses are not considered.
Aside from this waiting period, the following may also required by Fannie Mae for some loans:
a FICO score in the required minimum
a 10% down payment
Homeowners who are affected by foreclosures and looking to get a conventional loan from Fannie Mae should keep themselves updated on company guidelines since these are constantly revised.
