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foreclosureGoing through a foreclosure and losing your home can be devastating.  The good news is that buying a home is still possible.

Depending on the circumstances and the loan program you are using to buy your next home the rules are different.  That’s what I will be covering here today.

Types of “Foreclosures”

Foreclosure is foreclosure.  There are no real types of foreclosures when it comes to mortgage qualifying.  But there are some alternatives to foreclosure that can occur including short sales or deeds-in-lieu.

Foreclosure

When you purchase a home using mortgage financing a deed of trust is recorded.  The deed of trust is a legal document that holds the home as the security for the loan.  In other words, the home is the collateral for the mortgage.  In the case payments are not made the deed of trust allows the mortgage lender to take over ownership of the home.

Short Sale

Short sales occur when the seller of a home sells for less than the amount owed on the mortgage debt and the lien holder (mortgage company) accepts less than the full balance to satisfy the debt.

Deed-in-Lieu

Deed-in-lieu is where the owner of a home signs over their ownership interest (deed) to the mortgage company in-lieu of foreclosure.

Waiting Periods

Each loan program has a different waiting period for foreclosure or the alternatives to foreclosure.

When determing the waiting period for a foreclosure mortgage lenders calculate the time starting after the Public Trustee’s Deed is recorded.  For short sales and deed-in-lieu the time would start once the sales or transfer of ownership is complete.

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Foreclosure?  Short sale?  Bankruptcy?
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Conventional

Foreclosure

The waiting period after foreclosure to purchase using Conventional financing is 7 years.

Shorts Sale & Deed-in-Lieu

Short sales and deeds-in-lieu carry a 4 year waiting period for conventional financing.

FHA

Foreclosure, Short Sale & Deed-in-Lieu

FHA has the same waiting period for foreclosures, short sales and deeds-in-lieu – 3 years.

VA

Foreclosure, Short Sale & Deed-in-Lieu

VA has the shortest waiting period on foreclosures, short sales and deeds-in-lieu at just 2 years.

USDA

Foreclosure, Short Sale & Deed-in-Lieu

USDA has the same waiting period as FHA on foreclosures, short sales and deeds-in-lieu at 3 years.

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