Orange County Real Estate Specialists – Call Now at 949-355-9558
Who actually plans to have to do a short sale or a foreclosure when they are buying an Orange County home. The vast majority of home buyers enter into loans completely intent on keeping up with their debts.
That being said, life has a way of sometimes being a bit messier than planned. Financial situations can quickly change such as loss of job, illness and other unforeseen hardship circumstances and payments can become harder and harder to make.
Folks, according to the Los Angeles Times, if you thought you were barred from buying a home after a foreclosure or a short sale, the rules are now changing.
What is important to remember is that this sort of financial setback does not have to be the end all. Plenty of people have recovered and gone on to achieve their hopes and dreams as Orange County homeowners.
The question for most people who has ever gone through a short sale or foreclosure is how long they have to wait before they can move on to a new loan. It all depends on how your last loan ended and who you plan on getting a loan from.
Whether you went through an Orange County short sale or an Orange County foreclosure and whether you are looking to work with FHA, Freddie Mac or Fannie Mae all have an impact on how you must move forward.
FHA Loan Short Sales and Foreclosures
If you went through an Orange County short sale and plan on going with a Federal Housing Administration (FHA) loan, then your wait depends on whether you defaulted on your mortgage or not. Those who did not default can buy an Orange County home immediately while those that did will have to wait 3 years. With that said there is some flexibility. Those who build their credit back up and show that they defaulted because of factors that mitigate their personal responsibility can have their wait time shortened.
Anyone who went through a foreclosure and wants an FHA loan will face a standard wait of 3 years before their next loan. Still, the requirements reflect those of an FHA short sale. Loan seekers will be able to get a new loan sooner if they can show their foreclosure was caused by circumstances beyond their control. In addition, the better your credit is the shorter the wait will be.
Freddie Mac Loan Short Sales and Foreclosures
Those who went through a short sale and desire a Freddie Mac loan usually face a 4 year wait before their next loan. This can be shortened to 2 years if extenuating circumstances can be established. After an Orange County foreclosure the standard waiting period for a Freddie Mac loan is 5 years. The wait can go down to 3 years in the face of mitigating circumstances. Both periods are one year longer than their short sale counterparts.
Fannie Mae Loan Short Sales and Foreclosures
The Fannie Mae system is more complicated in this regards. According to the Fannie Mae Seller’s Guide the wait after Fannie Mae short sale is 2 years if 20% is put down by the borrower, 4 years with more than 10 and less than 20% down, and 7 years with less than 10% down. It can also be 2 years if the borrower can put more than 10% down and prove that there were mitigating circumstances.
With regards to Fannie Mae Loans after a foreclosure the wait is usually 7 years. This can be brought down to 3 years with proof of extenuating circumstances. After these 3 years there is an additional 4 years where additional requirements need to be met for another loan. The flat 7 year waiting period also applies to anyone looking for a second home,
Establishing Extenuating Circumstances
You may have noticed that some lenders will cut down your wait period if you can prove that your short sale or foreclosure was caused by extenuating circumstances. Think loss of job, illness, theft and the like. The circumstances must be both severe and unlikely. Lenders like to work with borrowers who can stay afloat even when they have to deal with major shake ups. Still, they realize that there’s only so much that most people can take at one time.
It’s also important to remember that it’s up to the borrower to prove that their problems were caused by forces beyond their control. Lenders hear many tragic stories and have reason to be skeptical. That’s why it’s important to provide proof of the circumstances you speak about.
One example of how a lender may look at extenuating circumstances is the FHA’s Back to Work Program. The program looks to help those who “can document that the delinquencies and/or indications of derogatory credit are the result of… any occurrence beyond the borrower’s control that results in Loss of Employment, Loss of Income, or a combination of both,” which results in an Orange County foreclosure or Orange County short sale. One step toward getting this assistance is providing the FHA with official, written proof of loss of employment.
Life is unpredictable. You can do everything correctly and still lose control of your finances when events beyond your control occur. Lenders can be persuaded but it will take more than just your word. That’s why it’s important that you find all the documentary evidence you can that helps prove that your financial troubles were not caused by your personal decisions.
Recovering From an Orange County Short Sale or Foreclosure
It’s helpful to look at things from the perspective of a lender. They are always looking to minimize their risks. Your short sale or foreclosure is a sign or risk, but it is not the only factor that should be taken into consideration. There are other goods that you can offer that will help balance out this sort of black mark as you re-enter the Orange County real estate market.
One thing that you can do is work toward reestablishing your credit. Your credit rating is the number most lenders will turn to first when deciding if you are trustworthy or not. It probably took a hit thanks to your real estate issues but there are plenty of things you can do to start turning things around. The better you are at pay off existing debts the better lenders will feel about handing you additional responsibilities.
You can also start saving up money so that you can offer more upfront. Once again lenders are all about risk, and the more you can save up the less risk they’ll have to take on. To be sure this is a difficult step to take, especially shortly after an event like a foreclosure, but that’s the nature of the business.
You Can Move Onward and Upward
Everyone falls down more than once over the course of their lives, no doubt about that. The difference happens when you get back up! Don’t let one mistake as a homeowner put a damper on your dream. You can rebuild and move on to bigger and better things. Yes, it can take some time, dedication and hard work but a previous foreclosure or short sale does not mean that you will not have another chance at buying an Orange County home.
Orange County Real Estate Specialists – Call Now at 949-355-9558
If you are thinking about selling your Orange County property, we have years of experience and extensive training in cutting-edge, online marketing technologies for today’s competitive market. If you are behind on your mortgage and don’t know what to do, we are experts in Orange County CA short sales.
The first step in the selling process is to provide you with an in-depth comparative market analysis (CMA) on your home. We will then create a comprehensive online game plan to get your Orange County real estate in front of as many people as possible and get it sold as quickly as possible!
As an investor, we have several services available in the preparation for the sale of REO’S and Short Sale properties. This includes a variety of professional sub-contractors who can do whatever is needed to prepare the property for sale. Once the property is ready, we can also help you with your specific marketing needs.
We provide Orange County CA real estate services within the following cities and communities, but not limited to:
- Laguna Beach – Emerald Bay , Irvine Cove , Crystal Cove,The Village, Crescent Bay and 3 Arch Bay
- Newport Coast – Pelican Hill
- Corona Del Mar – The Village , Spyglass and Cameo Shores
- Newport Beach – Newport Heights, Lido Island, Balboa Island, East Bluff, One Ford Road, Port Streets and Big Canyon
- Costa Mesa – Eastside Costa Mesa
- Huntington Beach
- Irvine – Turtle Ridge, Shady Canyon, Turtle Rock and Woodbridge
Give us a call today at 949.355.9558 or fill out our online contact form and let us know how we can best serve your Orange County real estate needs.
We look forward to speaking with you!
Real Estate Consultant
BRE License # 01771487
2010 Main St Suite 1250
Irvine CA 92614