Is foreclosure the end of your homeownership dreams forever? When it seems like foreclosure is a real possibility, this may be one of the number one questions on your mind – but you can take some solace in the fact that no stain on your credit lasts forever.
With careful planning and a little bit of patience, you can generally overcome the foreclosure on your credit report within a few years. Here are the basics you need to know:
How long you have to wait depends a lot on your unique circumstances
There are mortgage brokers out there that offer loans that are “non-qualified” by government standards, but they are generally something you want to steer away from – since they have high fees, high interest rates and lack certain consumer protections.
You’re better off waiting out certain periods to qualify for other loans. Depending upon your situation, you could qualify for:
- A VA loan through the Department of Veterans Affairs after two years
- A USDA loan through the U.S. Department of Agriculture in a rural area after three years
- An FHA loan backed by the Federal Housing Administration three years after your foreclosure case ends
It can take up to seven years to qualify for another conventional loan, through a regular bank, but there are exceptions made when you can show that a unique set of circumstances – such as a sudden loss of employment due to a business closure or industry collapse or a severe medical event – led to your financial problems. It’s worth talking to a few lenders after just three years.
When you’re facing an issue on the magnitude of foreclosure, don’t let your fear of the unknown paralyze you into taking no action at all. The sooner you seek personalized legal guidance about your potential foreclosure, the more options you may have.