Short Sales, Deed in Lieu, Foreclosure and Bankruptcy: When Can You Buy Again?

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We all remember the recession that occurred from 2007 until 2009—one of the darker economic periods in recent memory for Americans. Some people, unfortunately, remember it more vividly than others: Those who lost their homes during the lead-up to the housing bubble bursting, a trend that reached its worst point during 2012.

The good news: If you lost your home via short sale, deed in lieu of foreclosure, foreclosure, or even bankruptcy, then you may soon be able to qualify for buying a home again. Many of these events require, at maximum, four years before an individual is eligible to purchase a home again. That means many who lost their home in 2012, or before, will be permitted to own again by the end of 2016.

It’s important to understand your circumstances in particular, however, so you know when you can buy again.

Let’s start with conventional mortgages. If you were forced to give up your home via short sale or deed in lieu, then you must wait four years before buying again. If you lost your home to foreclosure, unfortunately, you must wait seven years before you can own again.

There is one exception, however: If you filed for bankruptcy while going through the foreclosure process, and you included your home as part of that bankruptcy filing, then you are eligible to own four years from the date of the bankruptcy discharge.

It’s important to understand what these dates mean, and this applies to all of the cases mentioned in this post: The date of the foreclosure sale is not the same as the date you left the property. Make sure you check county records to find out the official date.

There are several kinds of bankruptcy that may impact when you can buy a home again. Chapter 7 bankruptcy results in a four-year waiting period from the point of discharge, while a Chapter 13 bankruptcy only requires you to wait for two years from discharge. However, if you were dismissed from that bankruptcy because you stopped making payments, then you must wait four years.

Keep in mind, the situations listed above only apply if you had a conventional mortgage on your previous home. If you had a mortgage backed by either the Federal Housing Administration (FHA) or Department of Veterans Affairs (VA), then different rules apply. Watch our full video to find out the details in those cases.

Primary Mortgage Residential wants to help you get into a new home, and we offer a variety of resources to help you understand the financial process and how to get the best deal on your way to that home. Use these options to get expert tips on home-buying and shopping for loans.

 

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