North And Northwest of Chicago Real Estate : Thinking Of Buying A Home After A Short Sale Or Foreclosure ?

Lately I was asked this question alot, When can a home be purchased after a short sale and or foreclosure?

I visited many websites, had countless conversations about this topic with the professionals within the industry here in Chicago north and northwest suburbs. Bill Gasset,  a Realtor who has been heavily involved closing Massachusetts short sales over the last five years made an easy to understand break down on his Massachusetts Real Estate News website.

Short Sale With Fannie Mae Loan
    •    2 year wait if the borrower puts 20 % down
    •    4 year wait if the borrower puts between 10% to 20% down
    •    7 year wait if the borrower puts less than 10% down
    •    2 year wait if the borrower can show extenuating circumstances and puts more than 10% down

Short Sale with Freddie Mac Loan
    •    4 year wait before being able to get a loan
    •    2 year wait if the borrower can show extenuating circumstances

Foreclosure with an FHA Loan
    •    3 year wait before being able to get a loan
    •    Reduced wait if the borrower can show extenuating circumstances and re-establishes good credit

Foreclosure with a Fannie Mae Loan
    •    7 year wait from the completed foreclosure sale date
    •    3 year wait if the borrower can show extenuating circumstances. Additional underwriting requirements apply for 4 years after a 3 year waiting period.
    •    7 year wait for a 2nd home, cash out re-financing, or an investment property

Foreclosure with a Freddie Mac Loan
    •    5 year wait from the completed foreclosure sale date
    •    3 year wait if the borrower can show extenuating circumstances

Gene Mundt, Mortgage Banker, made a great explanation on how FICO scores are affected by short sales and foreclosures. He pointed to the guidelines recently given by FICO; here is an estimate as to the impact:

• 30 days late:   40 to 110 point drop
• 90 days late:   70 to 135 point drop
• Foreclosure, short sale, deed-in-lieu:  85 to 160 point drop
• Bankruptcy:   130 to 240 point drop

If you are thinking of buying or selling a home or may have short sale needs feel free to contact me.

North And Northwest Of Chicago Real Estate on Homes By Haris.