So you lost your home in bankruptcy, foreclosure, short sale or just gave it back to the lender using a deed in lieu, and you think you can’t buy a home again? Well, like ESPN’s Game Day co-host Lee Corso is known to say: “not so fast, my friend.” The prospect of buying a home again may not be as dismal as you might think. Let me explain.
Buy Again 1 Day After Bankruptcy, Foreclosure or Short Sale
Currently, FHA will allow a buyer to buy a home 1 day out of bankruptcy if the hardship was the result of extenuating circumstances completely outside the borrower’s control. The following is an excerpt directly from the FHA Underwriting Manual regarding Extenuating Circumstances. A borrower is generally not eligible for a new FHA-insured mortgage if, during the previous three years:
- His or her previous principal residence or other real property was foreclosed
- He or she gave a deed-in-lieu of foreclosure
Exception: The lender may grant an exception to the three-year requirement if the foreclosure was the result of documented extenuating circumstances that were beyond the control of the borrower, such as a serious illness or death of a wage earner and the borrower has re-established good credit since the foreclosure.
Divorce or Relocation Are Not Extenuating Circumstances
Divorce is not considered an extenuating circumstance. An exception may, however, be granted where a borrower’s loan was current at the time of his/her divorce, the ex-spouse received the property, and the loan was later foreclosed.
Note: The inability to sell the property due to a job transfer or relocation to another area does not qualify as an extenuating circumstance.
Current FHA Waiting Periods
FHA will allow a borrower to qualify for a home loan for a primary residence after meeting the following specified waiting periods:
- 3 years after foreclosure, short sale or deed in lieu of foreclosure
- 2 years after discharge of a chapter 7 bankruptcy
- 1 year after discharge of a chapter 13 bankruptcy
FHA May Waive Its 3 Year Foreclosure Waiting Period
RUMOR – RUMOR – RUMOR Only! This news story originated on September 10th, 2012. Shortly afterwards the news of FHA waiving it’s waiting periods spread like a fire in a wind storm throughout the internet on many real estate, mortgage and news sites. If FHA does waive its waiting period, it will be heralded far and wide. While nothing has been announced yet, this rumored move by FHA could be a huge opportunity for many to get back into the housing market much sooner than expected. Stand by for more information.
Want to Know If You Qualify to Buy Again?
When you can buy again depends on how you lost your home (e.g. type of bankruptcy, short sale, foreclosure or deed-in-lieu) and the kind of loan you wish to obtain. The rules are too lengthy and complex to present in this blog. Suffice it to say that we can help put you in touch with a highly qualified mortgage broker – who is willing to go the extra mile – and attorney who specialize in helping people become home owners again.
Don’t Quit on Yourself
Success is a team effort with an attorney, mortgage broker, buyer’s agent and you working in harmony to make your purchase a reality. Call us at (512) 827-8323 or email us at info@AustinRealEstateHomesBlog.com and we can help you get started with the home buying process again.