The Frugal Creditnista

How long do I have to wait until my foreclosure is deleted?

Q:   I had a foreclosure in 2010, how long do I have to wait until it is deleted?  I'm looking to purchase another home by next year.

A:  It depends on your state rules.  The Fair Credit Reporting Act states that it can remain on your credit report 7 years from the date it was filed.  Some states make the foreclosure filing apart of public record and in that case it can report 7-10yrs from the filing date.   And finally, some states allow it to report 7 years and 6 months from the date of first delinquency – which is the date you became 30 days late and never brought the account current again.  

I suggest looking at your report to see how it's reporting. As an example a client of mines was foreclosed on in April of this year and it was deleted in February of this year because it was deleted based off of the date of first delinquency, which was in 2007; do you think he's complaining? ABSOLUTELY NOT!

As far as purchasing again, you should be able to qualify for an FHA loan by now; typically it's 3 years from the foreclosure (unless you qualify for one of their extenuating circumstances and in that case it's 12mths {look up the guidelines on fha.gov}). As an example of this, I had a client's house get foreclosed on because of the death of her spouse, she had documented proof of how his income was THE income for their household and how she couldn't maintain payments alone (he did not have insurance either); she was able to purchase after 15mths of the foreclosure. When in doubt; consult a mortgage professional, but ONLY after ensuring you have done everything to rebuild your credit after the fact. 

One of the #1 issues I have in getting buyers approved is not their credit but their debt to income ratios being too high. Keep expenses down, make sure everything, including the foreclosure is reporting accurately and dispute for correction/deletion the items that are inaccurate, validate those non-medical collections for potential removal and make strides to obtain payment plans or settlements for other debts. 3 years is enough time to rebound from almost any negative, and since you're at the 5yr mark, take the next month or so really looking over your credit items, debt obligations, savings and overall finances to see how long it will take for you to make a move towards being a homeowner again.  Again, consult with a mortgage professional, they can point you in the right direction :).

~ Netiva

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