Have you wondered how buying a home after a short sale or foreclosure works? Since the housing market crisis, many people have found themselves selling their home as a short sale or they have been through a foreclosure. The majority of these former homeowners has either found living arrangements with family or friends or has been in a rental property since they could not buy a home after a short sale or foreclosure.
With the great interest rates and low home prices many of these people would like to buy their own home again but how does that work? Depending on the situation, they may qualify for a loan in as little as 3 years!
If someone was foreclosed on, FHA requires a 36 month waiting period and Fannie Mae or Freddie Mac require 84 months from the completion of the foreclosure.
If someone sold in a short sale, FHA requires a 36 month waiting period, Fannie Mae requires 72 months and Freddie Mac 48 months.
These numbers are general guidelines, there are extenuating circumstances, other types of loans and the time may vary from state to state. If it has been at least 3 years since the short sale or foreclosure was completed, contact a mortgage professional to see if you may qualify for a mortgage to purchase a home. In the meantime, work on your credit score, pay your bills on time and do not take on excessive amounts of debt.
According to Freddie Mac, mortgage rates continue to decline and set new record lows! Reasons for the new historic lows are a weakening economy and the Federal Reserve’s continued purchase of mortgage securities.
The 30-year fixed rate mortgage averaged 3.36% for the week ending October 4, falling below the all-time low of 3.4% set last week. Last year at this time, the 30-year fixed rate mortgage averaged 3.94%. The 15-year fixed rate mortgage, a popular refinancing choice, averaged 2.69%, falling from 2.73% last week and setting a new record low. A year ago, the average rate for a 15-year fixed rate mortgage was 3.26%.
According to CNN, the new federal regulations which require lenders to be more accurate when estimating closing costs seem to be decreasing mortgage costs, the amount new home buyers are paying at closing. The average cost of closing on a mortgage has fallen by 7.4% over the past year, according to a recent survey by Bankrate.com. Closing costs include loan origination fees like application fees and credit check and third party fees such at title searches and insurance. The regulation, which was put in place two years ago as part of the Real Estate Settlement Practices Act requires lenders to provide a “good faith estimate” of third-party fees that is within 10% of the actual amount the buyer will pay. It appears that the biggest drop is in the third party fees. Closing costs vary from state to state and within states even down to different neighborhoods.
If you are thinking about buying a home one of the first things you need to do is check on and perhaps improve your credit score. Whether or not you can get financing and what kind of financing you can get depend a lot on your credit score. If you score is not up to par you will need some time to work on it before you can get pre-qualified for a mortgage which also has to be done before you can buy a home. (more…)