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Bankruptcies, Foreclosures & Short Sales

There are special considerations when obtaining a mortgage after you’ve experienced a foreclosure, bankruptcy or short sale, or if you are interested in purchasing a foreclosed property. Please review the following information, then contact a Bremer mortgage loan officer to discuss your specific needs and financing options.

In the unfortunate event of a short sale, foreclosure or bankruptcy, there is still a real possibility for borrowers to obtain mortgage financing again. Below are key factors to consider when looking to buy.

Waiting Period Before Obtaining New Financing

Short Sale
Foreclosure
Bankruptcy
Conventional 2-4 years 7 years 2-4 years
FHA 3 years 3 years 2 years
VA 2 years 2 years 2 years
USDA 3 years 3 years 3 years
  • Short Sale

    • Conventional
      2-4 years
    • FHA
      3 years
    • VA
      2 years
    • USDA
      3 years
  • Foreclosure

    • Conventional
      7 years
    • FHA
      3 years
    • VA
      2 years
    • USDA
      3 years
  • Bankruptcy

    • Conventional
      2-4 years
    • FHA
      2 years
    • VA
      2 years
    • USDA
      3 years

Note that timing can vary depending on the circumstances of past derogatory credit.

Re-establishing Credit: What You Need to Know

  • The minimum credit score required is as low as 640, depending on the investor.
  • Pricing is based on credit score. The lower the credit score, the higher the pricing is likely to be.
  • Reducing LTV (loan to value) with down payment funds may allow for a shorter wait period depending on investment.
  • Automated underwriting is required on all programs so items such as recent late payments, unstable employment, or lack of reserves will affect underwriting decisions.
  • Certain restrictions apply. Subject to credit approval.

Please review the below guidelines and policies when considering a foreclosed property:

  • Foreclosed properties are typically sold “As Is.”
  • Ask the real estate agent when the home was last sold to identify if the loan was a flipped property. Flipped properties can require that additional conditions be resolved, such as: waiting period, second appraisal, documentation of repairs, etc.
  • If you back out of the sale after the inspection period, you have the potential to lose your earnest money.
  • Repairs may be required at the borrower’s expense and prior to closing; you must have the funds to cover the costs.  There can be issues with the seller allowing access to the property.
  • Water and electric must be turned on prior to the appraiser inspecting the property. This may be an issue with the selling entity.
  • Health hazard items (e.g. mold, bad septic systems and bare wires) require a health or safety inspection. The listing agent for the foreclosing entity will be required to let the inspector(s) into the property and may require repairs prior to closing. Bremer will not close on a loan with a health hazard risk on the property.
  • Receiving acceptance of your offer may take time. Plan on anywhere from 14-85 days.
  • You will be required to use the Seller’s title company for closing.

There are additional considerations during the mortgage lending process for a foreclosed property. Please talk to a mortgage loan officer for more information.

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Deposit products offered by Bremer Bank. Member FDIC.

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