Prodigy Real Estate - SI NY Real Estate Blog

Before jumping back into the home search, there are six things you will need to know first.

1. There is a waiting period: After you lose your home to foreclosure, you always must wait a certain period before being able to get a new mortgage. This waiting period only starts, though, once the foreclosure is officially completed by the bank. The type of new mortgage loan you will be looking into getting will decide on how long you have to wait.  FHA loans have about a three-year waiting period; Portfolio loans could have a shorter wait period, since lenders keep those loans; and Conforming or Conventional loans could have a longer wait period, since lenders sell those loans to Fannie Mae or Freddie Mac.
2. Make sure your credit is okay: Once you have your house foreclosed upon, it is reported on your credit, causing your credit rating to go down. Foreclosures take seven years before they are no longer on or affecting your credit report, but after a few years, the impact of it starts to lessen. If that is the only item that affects your credit, then you will just have to wait it out. If you also have late/missed payments, accounts in default, or anything else damaging your credit, you must take care of those items right away so that when time does come, they are no longer affecting your rating either. Another way to help this is to make sure your income is covering your debts, so that way your debt-to-income ratio is not exceeding the lender's guidelines.
3. Make sure the foreclosed property isn’t on CAIVRS: If you had an FHA or U.S Department of Veterans Affairs loan on the property foreclosed upon, you will need to make sure that the property is not on the Credit Alert Verification Reporting System (CAIVRS). This is a government database that allows lenders to see if an applicant has an unpaid government-insured debt. If you are on there, you will not be able to receive another government-backed loan until the claim, loan, or lien is paid off. The CAIVRS is only accessible to authorized lenders, so make sure you ask your lender to check before going forward with anything else.
4. Make sure you have enough money for a down payment: Nowadays, most mortgage loans you get have a minimum down payment you need to pay at closing. If you are obtaining an FHA loan, you need a minimum down payment of 3.5%.  If you are getting a conforming loan without PMI (Premium Mortgage Insurance), you would need a 20% down payment. If you are applying for a conforming loan that does have PMI, there is less of a down payment than the 20%. For those who are looking into applying for a VA loan, Navy Federal loan, or a Department of Agriculture loan, there is no minimum down payment.
5. Make sure you are pre-approved: Even before you start looking to buy a house, it is a smart move to get pre-approved for a loan. This way, your real estate agent will know how they can help you and what they can do for you. Pre-approval is just a way to safeguard yourself while looking for a home.
6. Make sure you have a plan: Once you think you are ready to start looking for a home again, it is a good idea to set up a meeting with a real estate agent. At this meeting you should tell your agent that you went through foreclosure before, that way they know how they can help you and what steps you need to take to make sure your buying process goes smoothly.

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• Foreclosure (3)
• Buying After Foreclosure (1)