In today’s real estate market, foreclosure or short sale are two of the most popular terms. Actually, almost fifty percent of all the Arizona real estate listings are distressed properties; as such, whether you want to sell your home, are looking to purchase a home, or work in the real estate industry, you have most likely heard the terms foreclosure or real estate a lot. However, even though these terms are used a lot, there are quite a few people who do not know exactly what they mean, or how they will be able to buy such properties after having filed for bankruptcy.
By now we are all aware of the troubles of the economy and of the real estate market and the effects they have had on people’s lives. Astonishingly, it’s been more than four years since the bubble burst and things unraveled so quickly for so many people. What this means to the marketplace though is that those first waves of people who had gotten into trouble are now starting to come out of the other end of the tunnel. What does this mean?
There were three course of actions that people took that inhibited their ability to buy another home right away. Short Sale, Foreclosure and Bankruptcy. Each of these events, though devastating at the time, are all cured over time. Each one is treated a little differently than the other. But generally, after two to three years most folks can buy another house if they’ve kept their nose clean and paid their bills on time. Here’s a look at each one.
A short sale can be defined as, homeowners negotiating with the mortgage lender to ‘forgive’ some amount of the debt owned on their homes, so that they can prevent their homes from going into foreclosure. For example, you owe approximately $350,000 on your home; however, the market is currently demanding $225,000 for it. If your mortgage lender will agree to accept less than the original loan amount, you can try to sell your home for $225,000. Generally, mortgage lenders only agree to a short sale if there is proof that you are undergoing some type of financial hardship such as losing your job.
The FHA loan program will allow you to qualify for a new mortgage no less than 36 months after the short sale closing date of the home.
Foreclosures are not too much different except for the fact that the bank acquired the property at a trustee sale and the home owner relinquished all ownership rights to that property without going through the normal sale process.
The home owner who suffered through a foreclosure must also wait 36 months from the trustee sale date until they can qualify for a new mortgage.
The final event that many people have been faced with is Bankruptcy. Most people file for a Chapter 7 Bankruptcy. This type of bankruptcy eliminates all debts. the process takes 3-6 months to complete and the completion is called the Dismissal. Any person who has filed for bankruptcy must wait 24 months, but not less than 12 months, after the dismissal before they can be qualified once again for a mortgage.
Some people however must file a different kind of bankruptcy. This is called the Chapter 13 Bankruptcy whereby some types debts are dismissed without further obligation and the others are put into a payment plan, generally 60 months in length. The person filing the Ch. 13 bankruptcy will be eligible for new mortgage financing within after 12 months of on time payments to the trustee and with the trustee’s approval.
Duckworth Lending will provide you with information that will definitely find helpful, once you decide to purchase a home after you have filed for bankruptcy or have suffered through a short sale or a foreclosure. Give us a call.