ASK A LENDER TO CONSULT CAIVRS: Rebound buyers whose foreclosed loans were backed by the FHA or U.S. Department of Veterans Affairs should be aware of CAIVRS, a government-run database of government-guaranteed loan delinquencies. Borrowers whose unpaid government-insured debts are tracked in CAIVRS typically can’t obtain new government-backed debt.
“If a claim has been paid by the federal government on a previous mortgage, you’re ineligible until you repay the government the claim amount that was paid,” Carpenter says.
CAIVRS isn’t publicly accessible, so borrowers must consult an authorized lender to find out whether their foreclosed loan is listed.
BE READY TO MAKE A DOWN PAYMENT: Rebound buyers who purchased their prior home with little or no cash are often surprised to learn that a down payment is required today, says Marian Norris, a real estate broker in Stockton, Calif.
“When they purchased their last house, they didn’t have to come in with any money. The world has changed since then,” Norris says.
The FHA requires a down payment of at least 3.5 percent of the purchase price. The minimum down payment for a conforming loan without mortgage insurance is 20 percent.
GET PREAPPROVED: A loan preapproval from a lender is a must for rebound buyers, Temple says.
“I want to know they’ve been vetted properly before we spend our time with them and find out they can’t buy anything,” he says.
That attitude among real estate agents and home sellers is typical, so buyers should expect to speak with a lender before they’re taken out to see for-sale homes.
HAVE A PLAN: Rebound buyers tend to assume they’re ready, even when they still have issues that need to be addressed, Temple says. That’s why it can be helpful to consult a real estate professional in advance.
“The biggest thing is to start early,” he says. “Get in front of somebody and say, ‘If I want to buy a house again, what do I need to do?’ It might take a year. It might take two years.”
Marcie Geffner is a freelance writer in Los Angeles who covers mortgages and banking for Bankrate.com.
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