When the bottom fell out of the real estate market and the economy spiraled down, many Florida home owners found they could no longer keep up with their mortgages. With job losses, medical bills and other unexpected expenses, there seemed to be no way out for many. To make tragic situations worse, not only did families lose their homes, but men and women sacrificed their hard-earned credit scores just to keep financially afloat.
In years previous, a stigma accompanied just the idea of walking away from a mortgage or claiming bankruptcy. Today, the stigma is gone as more and more Orlando-area homeowners are faced with the choice of pursuing a short sale, defending against foreclosure, filing for bankruptcy or walking away from their homes. However, though the negative perceptions may be history, the severe impact on credit scores are very much reality. The good news is it is possible to repair damaged credit, qualify for a mortgage and reclaim the stability of having a home.
Two-Year Rule Is History
The rule governing when a person could qualify for another mortgage depends on the situation, such as short sale or foreclosure, and the extenuating circumstances, such as if a mortgage was current at the time of the home loss. However, in general, it would take two years for a person’s credit to rebuild sufficiently to obtain a loan after a short sale. Other situations require from one to ten years.
With the poor real estate market and sluggish economy, banks are working to provide options. Generally, it used to take two years to get a mortgage after a short sale, but now the wait period may now be as little as twelve months. According to Robby Molony, a senior loan officer at PHH Home Loans, “it differs based on the type of loan and how the underwriters look at the extenuating circumstances on an independent case-by-case basis.” Because each underwriter may use discretion for each case and lending requirements may vary by bank, a situation is not hopeless if one institution declines a loan.
Credit Repair Is Essential
Following a loss of a home due to short sale, foreclosure or bankruptcy, it is important for an individual, couple or family to immediately begin the credit repair process. A key to rebuilding credit is responsibly using credit cards, and getting a secured credit card is a good place to start. By lightly using the credit card regularly and paying it off in full every month, credit scores should start moving upward. Additionally, paying rent and any other bills in full and on time will also help to raise a credit score and get you into your own Florida home, if that’s what you seek.
The good news is that, with a bit of planning and the assistance of a Florida debt relief attorney, getting out of one home may allow you to get into another, more affordable one in a little over a year.