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My wife and I are recovering from a foreclosure on our home in Phoenix, AZ in 2010. This July, we're eligible to buy again after the mandatory 3 year waiting period. Let me give you a quick synopsis of our current situation:
- Since the foreclosure, we've paid off all debt (except for one vehicle loan for $20k we kept to help rebuild our credit).
- We pay our credit cards off in full every month.
- My credit score is around 700, my wife's around 715.
- We've saved about $125,000 since the foreclosure to use for a home ($15k or so will be held in cash savings).
- My current gross income is around $14k/month.
- We'd ideally like to buy a home in an area of Southern California we like where the homes are on about 1/2 acre, built in the 80s/90s and run from the low $400s to the mid $500s. This neighborhood only has a few homes for sale at any given time.
If we were conventional buyers, we'd have no problem and I think we'd look pretty strong. However, since we're FHA, my fear is that we're going to lose out on a lot of houses because sellers don't want to deal with FHA buyers.
With this in mind, here are my questions:
- What can we expect when going in to make offers on a home with our situation?
- Is there anything we can do or offer to sellers that would entice them to accept our offer?
- Why, specifically, don't sellers like FHA buyers?
Be careful with that 3 year wait period (it is actually 38 months). The wait period starts from the time the claim was paid. Not when the foreclosure happened.
Call 1-800-225-5342 and find out when your FHA claim was paid as sometimes it can take 1-2 years for the claim to be paid out, which really means a 4-5 year wait period from the foreclosure. I literally had a buyer contact me in the same situation last month, and that information is what the lender gave me.
Sorry, no to clarify it was not an FHA loan that was foreclosed on. FHA did not pay out for our foreclosure. It was a conventional mortgage on the house that was foreclosed and the date of the sale of the home at auction was in July of 2010 although we left the house a year before that.
However, our new house will need to be financed with an FHA loan because conventional lenders still won't touch us for another couple of years even though our finances are in order.
I thought new FHA loan was 2 years after a foreclosure and a new conventional was 3? You may wish to contact a local mortgage person to be sure. This may apply to SS's and not foreclosures. I am not a mortgage broker, so you need to check with a real local person.
I thought new FHA loan was 2 years after a foreclosure and a new conventional was 3? You may wish to contact a local mortgage person to be sure. This may apply to SS's and not foreclosures. I am not a mortgage broker, so you need to check with a real local person.
From everything I've read, new FHA loans are available starting 3 years after the date of the sale of the home at auction. However, I don't want to derail this thread too much. I'd still like to get some answers as to what to expect when buying a home with FHA given our circumstances.
A big pain in the ass: save your money and at the rate you have saved buy a house cash in 4 years and you will never worry about a foreclosure again. Thats what I did but I skipped the part were you lost everything. With the money you save on closing cost you could pay off your car.
We went FHA when we bought our home. We wanted to capture somewhere near the bottom of a very high COL real estate market, so saving until we got 20% wasn't an option. What to expect, for us it wasn't very different than a normal mortgage. There were document requests repeated and paperwork galore, but not much more than a traditional mortgage.
One thing I will warn is that you may lose some houses because you are an FHA buyer. Sellers are under a perception that FHA is nit picky and a PITA. While that used to be true (holding up closings over no handrails on the front steps and minor things like that), that is no longer the case. However, the misperception remains. Also, in states where a significant amount of money is put down at contract, sellers may not be willing to accept only 3.5% down on contract. My advice to you is to be patient and be flexible and it should all work out.
Ah...I assumed that you had FHA the first time. What you need to know is that while FHA has guidelines, there might be lender overlays. A lender overlay is an additional guideline that the lender places on the FHA loan.
I closed one FHA buyer last year that had a foreclosure three years prior due to a divorce. I had them talk to a lender before we even went looking. The underwriter had a preliminary look at their file and said what kind of documentation they would need. We had all that in place before we house hunted. So after that, it was easy. It doesn't matter what we say on this board. What matters is what an underwriter thinks of your file. So find a lender that does underwriting in house and have the underwriter look at your file before you hit the streets looking for a house. So when we wrote offers, I was able to tell the agent that the underwriter had seen the file and we had conditional underwriter approval (conditional on offer, title report, appraisal, etc).
After that just hire a really great buyer agent. You will need someone advocating for you. They will know how to negotiate to get you a house.
FHA is pretty common up here so sellers don't balk at it.
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