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Used to be, a foreclosure was something people seldom spoke about. Today, times have changed. Right now is the ideal time to buy a new home with record lows in mortgage rates and an increase in available, affordable homes. But if you’ve got a foreclosure or short sale on the books, you might be asking — how long before we can buy again?

The housing bubble forced more than 6 million homeowners to foreclose, or “short sell” — when the lender agrees to let the owner sell the home for less than the balance of the note. Easy credit and robust demand created the perfect storm, and many found themselves overextended. Short sales and loan modifications weren’t always plentiful in 2006 and 2007, at the precipice of the crisis, and many people were forced into foreclosure.

If you’re one of them, don’t despair. True, a foreclosure listed on your credit report stings. According to, a foreclosure subtracts 250 to 280 points from your credit score and remains on your report for seven years. However, your chances of obtaining a loan may be better than you think. So the first step is to make certain your credit is in good shape; then, figure out an affordable monthly payment.

Next, talk with a lender or broker you trust. According to Mike Langs of Arizona Mortgage Specialists, each lending institution adopts its own eligibility requirements, but most adhere to the rules established by the organizations that buy up most of the loans made by banks: Fannie Mae and Freddie Mac, FHA, and VA.

According to Langs, “Every situation is different; still, lenders typically follow the guidelines accordingly. For example, after a short sale, Fannie Mae requires buyers to wait up to two years for a new loan up to the amount of $417,000, and requires buyers to bring a 20 percent down payment, and buyers with a foreclosure on their record must wait between five to seven years.” VA and FHA loans have different requirements, however, so it’s best to talk to a professional who can navigate the best options.

So work on your game plan and talk to a professional. Before you know it, you too will enjoy another shot at the American dream.

• Bonny Holland is with Keller Williams, Sonoran Living in Ahwatukee Foothills. Reach her at (602) 369-1085, or on Facebook and Twitter.

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