Foreclosure affecting my credit....

[Anonymous]

I am afraid that I may be forced into foreclosing on my home. Up until this point, I've had no blemishes on my credit reports at all. My Equifax score is around 750, and last time I checked my TransUnion it was 825. I've heard a lot of different stuff about what will happen to my credit if I have to go through Foreclosure, but I'm looking to these forums to find out the truth. 1. Is it true that a foreclosure will stay on your credit history for 7 years and then be removed? 2. How many points am I likely to lose off my credit score with a foreclosure? What about all the late payments that may happen prior to the foreclosure, are those all separate hits to my credit score than the actual foreclosure itself? 3. How long after a foreclosure would it be possible for me to get approved again for a home loan? About what credit rating would I need for a decent loan? Thanks in advance for any help with this!!

[Anonymous]

Lots of variables here-

lots of them are unknown-  

Facts:

An actual Foreclosure is a public record that goes on your credit report in the same place as a BK or judgment.

It would stay on for 7 years-

The trade line for the mortgage would ALSO be marked derogatory-

Opinion:

A deed in lue or short sale would be better- than the going though a full Foreclosure procedure- (while some people have been living in a pre-foreclosure for 6 to 10 months without paying the bank- but In California there is a judge putting people in jail for this)

Did you lose a job or some other life changing thing that has put you in this situation?  Is there no working something out with the lender?

A lender would much rather have you STAY in the house making payments-

Message Edited by Timothy on 05-28-2008 05:13 PM

[DallasLoanGuy]

right now you will be a renter fo 3yr from the foreclosure date on fha.

conventional will make you wait 5= yrs(currently being revised and may be 7yrs for some)

[Anonymous]

"right now you will be a renter fo 3yr from the foreclosure date on fha. conventional will make you wait 5= yrs(currently being revised and may be 7yrs for some)"

Will you please explain exactly what you mean by this?

I don't understand the terms you are using.

Sorry, but I'm not loan or credit savvy.

What is fha? What is conventional?

What exactly is being revised and will it likely be a favorable or unfavorable revision?

Thanks!

Message Edited by Duck_Butter on 05-28-2008 08:24 PM

[DallasLoanGuy]

fha = govt backed loan program. 3yrs after foreclosure they will let you buy again.

conventional = typical loan backed by fannie mae or fredie mac and the loans are packaged up as morgage backed securities and sold on wall street.

fannie mae is currently revising their loan guidelines. i believe that people who walk away from their mortgages will suffer a 7yr hiatus from buying again. currently they are at 5yrs for unfortunate folks who lost their homes due to circumstances beyond their control. these unfavorable changes are a result of many people who can pay their loans, but elect to walk away because they dont like the fact that they are upside down on their loan..... because they view their home as an investment and not a place to raise kids and live.... it is happening every day!!!

[Anonymous]

Why don't you apply for a line of credit through a credit union or bank if you have such good scores and pay up your back payments than losing your home? going through the process of renting an apt would cost you at least two or three mortgage payments.

Just said I should point this out. Goodluck!

[Anonymous]

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Duck_Butter wrote:
I am afraid that I may be forced into foreclosing on my home. Up until this point, I've had no blemishes on my credit reports at all. My Equifax score is around 750, and last time I checked my TransUnion it was 825. I've heard a lot of different stuff about what will happen to my credit if I have to go through Foreclosure, but I'm looking to these forums to find out the truth. 1. Is it true that a foreclosure will stay on your credit history for 7 years and then be removed? 2. How many points am I likely to lose off my credit score with a foreclosure? What about all the late payments that may happen prior to the foreclosure, are those all separate hits to my credit score than the actual foreclosure itself? 3. How long after a foreclosure would it be possible for me to get approved again for a home loan? About what credit rating would I need for a decent loan? Thanks in advance for any help with this!!

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Fight for your credit

DO NOT GIVE UP

Contact your lender and try to make arrangements.  refinance

If possible do a short sale.  Rent a house for one year while paying off the balance left on your home.

Then next year (or when you are able to) you can try to purchase another home in your range.  Your lender does not want you to foreclose either. 

Believe me, foreclosure is a mistake you want to try to avoid.

[Anonymous]

I really appreciate EVERYONE who has left a comment thus far. There are a few additional questions and comments, however, that I have:

1. I am assuming most loans then are the conventional type? How does someone even apply for an fha loan? Are there special qualifications for these?

2. I have had a couple different loan officers tell me that I would be able to get approved for a new home loan 1-3 years after foreclosure. Obviously this is conflicting information from what some of you posters are telling me. Can anyone explain why?

3. Are there any other parameters that determine when and how long you have to wait for another loan? For example, is it just cut and dry, you WILL NOT get approved for a home loan for 5 years from foreclosure? OR are there other considerations involved? What if I am able to make a 40% down payment on the new home? Would I still be automatically rejected with that much instant equity in the home for the bank? What if I accept a higher interest rate, etc?

4. I have also heard from several sources online that a Short Sale can be just as damaging to your credit as a foreclosure. Fact or Fiction?

Thanks to all again for your willingness to help and share information.

Message Edited by Duck_Butter on 05-29-2008 06:16 PM

[Anonymous]

A short sale is not as bad.  A foreclosure stays on your record for 7 years.  FHA loan is for people with lower credit scores and they don't even care how much money you make...only your credit score. Anyone can qualify for it, but only some mortgage brokers offer it...not all.

They just changed the limit to 5 years for an FHA loan...meaning that only after 5 years AFTER a foreclosure, can you buy a home....no matter how much money you put down.

There are a lot of people in the same situation as you are...including my wife (she bought the place before I met her).

Life will go on...don't worry.

[DallasLoanGuy]

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Duck_Butter wrote:
I really appreciate EVERYONE who has left a comment thus far. There are a few additional questions and comments, however, that I have:

1. I am assuming most loans then are the conventional type? How does someone even apply for an fha loan? Are there special qualifications for these? Most loan officers have access to both programs. If they do not, you would want to find another loan officer. These are govt backed loans.... not loans made by the govt. Banks and brokers do the loans.

2. I have had a couple different loan officers tell me that I would be able to get approved for a new home loan 1-3 years after foreclosure. Obviously this is conflicting information from what some of you posters are telling me. Can anyone explain why? Yes, there are a couple of niche programs for people right out of b/k. Not everyone qualififes. One is a rural loan and another is for people below median income. There may be more. Tell us more about those programs and maybe we can tell you more about them.

3. Are there any other parameters that determine when and how long you have to wait for another loan? For example, is it just cut and dry, you WILL NOT get approved for a home loan for 5 years from foreclosure? OR are there other considerations involved? What if I am able to make a 40% down payment on the new home? Would I still be automatically rejected with that much instant equity in the home for the bank? What if I accept a higher interest rate, etc? Loan guidelines dictate the foreclosure rules and dont offer exceptions for % down. So, yes, for those programs it would be an automatic rejection.

4. I have also heard from several sources online that a Short Sale can be just as damaging to your credit as a foreclosure. Fact or Fiction? fact. lender will consider it exactly the same as foreclosure.

Thanks to all again for your willingness to help and share information.

Message Edited by Duck_Butter on 05-29-2008 06:16 PM

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i am confused.... you stated earlier that you have perfect credit. did something happen that you cannot afford the home anymore?