Great news hot off the presses from Fannie Mae – now it’s easier to get a mortgage after bankruptcy, short sale, or foreclosure in New York.
Federal mortgage backer Fannie Mae declared important changes for people who are trying to secure a mortgage after bankruptcy. The mandatory waiting period for individuals who went through bankruptcy, short sale or foreclosure is now just two years instead of four. According to an article by The Mortgage Reports, “This is one year longer than the FHA’s minimum waiting period via the FHA Back to Work program, and a major improvement for conventional mortgage borrowers nationwide.”
So what does this mean? Now that people can apply or re-apply for a home mortgage sooner, our office is working with clients who have gone through recent foreclosures or bankruptcy hearings to get them up to speed. In the past, borrowers who filed for bankruptcy in New York had to wait four years before applying; now the waiting period will make a mortgage application more manageable and give people the opportunity to get a fresh start on securing their home.
And Fannie Mae isn’t alone. It joined the list of loan-related agencies who have similarly softened their takes on mortgage guidelines. This offers needed relief to borrowers who have gone through the emotional experience of a bankruptcy or foreclosure, and more applicants can now qualify for loan financing. While bankruptcy is a sound option for many, it still takes time to strengthen credit after the fact, and the recent recession has been hard on many homeowners since 2008.
But while this change, and the overall evolution in the industry, is a good one, it’s still important to review all of your options and budget effectively. Take a look at all the potential mortgage rates available to you based on your credit score and current equity, along with mortgage insurance premiums. Just because Fannie Mae lowered their waiting period does not make them the best option for everyone. You need to review all your lender options and decide whether or not a conventional mortgage is right for you. You also need to look at your post-bankruptcy budget to make sure it’s the right time to apply for a home loan.
And while we’re on the subject, another loan option is the FHA Back to Work program. FHA mortgages come with down payments of 3.5% versus Fannie Mae’s typical payment of 5% or more. This may make FHA a more appealing choice to applicants with less cash on hand for a down payment.
Fannie Mae’s decision ultimately makes it easier ways to become mortgage-qualified after bankruptcy. Lower mortgage rates also mean lower monthly payments for an applicant’s, and they raise an applicant’s buying power in the market. These important changes to mortgage rules allow people and families who have gone through bankruptcy, short sale, or foreclosure in New York to make the dream of purchasing a home a reality.