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Bloomberg reports 1 in 7 people who lost their home to a foreclosure or short sale during the recession are now eligible to buy again through the Federal Housing Administration. By the end of next year, more than a quarter will be eligible.
People getting back in the market after a short sale face at least a three-year waiting period and a down payment of at least 3.5 percent for an FHA mortgage.
Many still don’t have the credit to buy – the average FICO score for conventional home loans was 761, and more applicants have a score above 800 than a couple years ago.
Others don’t have the savings; the average down payment is 20 percent.
Bloomberg’s story has advice on rebuilding credit to prepare for another mortgage: budget carefully and give up luxuries to make sure you pay all your bills in full on time. Get errors on your credit report fixed and try to get a small line of credit from your bank.
While any error could potentially make your score lower than it should be, there’s a bigger problem if you’ve been through a short sale. An expert from the National Consumer Reporting Association warns that short sales are often mistakenly listed as foreclosures, which can make you ineligible for a Fannie Mae or Freddie Mac backed loan for seven years.
For more advice on getting a loan or (re)building credit, check out the stories below.