Did you miss the fact that foreclosure filings were up 71% in the third quarter?
Which makes it a good time to remind everyone of the rules that govern when and how you'll be eligible for a mortgage after you've been foreclosed, surrendered a deed, or negotiated a short sale.
For borrowers with a foreclosure, short sale, or deed in lieu of foreclosure on their credit history, the following timelines apply before they'll be eligible for a conforming, conventional mortgage (Fannie Mae/Freddie Mac):
Foreclosure: 5 years from completion date, minimum 680 FICO and 10% down for 7 years, investment property, second homes, cash out refinances not allowed for 7 years.
Deed-in-Lieu of Foreclosure: 4 years, at least 10% down required for 7 years.
Short Sale: 2 years. 4 years for Freddie Mac
For what it's worth, under FHA rules you have to wait two years before you are born-again.
Goes without saying that if you do wind up with a foreclosure (or one of it's close cousins) on your record, unless you handle the period after the foreclosure properly by re-establishing credit – no easy trick with a serious derogatory on your record - and accumulating a sizeable down payment, you are likely to be renting for a long, long time.
Or, another way to look at this: At some point in the next five years, buying may look really cheap, and you'll be locked out of the game.