Betsie Melter's Real Estate Blog

This is a question that I get asked a lot. I thought that it was 7 years, but I recently read in the Arizona Realtor Magazine that it could be more like 3 years. Wow, that isn't that long to have to wait. I was really shocked. But that could be great news for people who did a strategic walk away and are working on getting their credit back in order.

According to Patrick Ritchie, the author of the article, some consumers will have a chance in as little as 3 years from a foreclosure to purchase again. The FHA guidelines allow for a loan to be obtained 3 years after as long as NOTHING else has been delinquent. Any negative reporting or any missed or late payments will negate it, but if everything has been paid on time, then more than likely a buyer can purchase again.  Now, there are circumstances where an FHA, VA or USDA loan may have a claim against them in the Credit Alert Verification Reporting System. If that is the case then the 3 years starts after that claim has been paid. A loan officer can check in the HUD system to see if a buyer has a claim against them. This might be something a homeowner may want to check on sooner rather than later if they plan on purchasing another home in the future.

Just because a person has waited 3 years and hasn't missed any payments, doesn't mean they are automatically approved for a loan. As we know, right now there are very tight guidelines. That would just be the first step in knowing you can try. Any borrower still has to have good credit, make enough money to qualify for the loan, and have a down payment. Employment is also a big deal. The borrower needs to have been employed for at least 2 years with the same company or in the same industry.

The underwriter has the final say, of course, as to whether or not a borrower will get the loan. But at least now we know it isn't an automatic 7 years, like I had previously thought.

If you would like more information on what time lines exist for short sales, bankruptcy's and other situations, click the link below. The National Association of Realtors has put together a chart for different experiences.

http://www.realtor.org/wps/wcm/connect/1919ce80433346c5849787b0e53c74b2/government_affairs_impact_credit_events_07112010.pdf?MOD=AJPERES&CACHEID=1919ce80433346c5849787b0e53c74b2