No one wants to go through the foreclosure process, but if you have a foreclosure in your past, it doesn’t necessarily mean you won’t be able to get a mortgage.
It is possible to get a mortgage following a foreclosure, as long as you understand the process.
So what, exactly, do you need to know in order to secure a mortgage after dealing with a foreclosure?
A recent article from realtor.com outlined what potential homeowners need to know if they have a foreclosure in their past, but want to buy another home in the future, including:
You will have to wait.
As mentioned, it is possible to get a mortgage following a foreclosure, but not right away. If you have experienced a foreclosure, there is a waiting period before you can apply for another loan. How long that waiting period will ultimately depend on the loan program; for example, you will have to wait at least seven years for a conventional loan, while FHA loans have a required three-year waiting period.
You will have to rebuild your credit.
A foreclosure can cause your credit score to take a serious drop. If you want to secure a mortgage, you will need to repair that drop and get your score up; most lenders will want to see a credit score of at least 580. To ensure your credit score is headed in the right direction, keep credit card balances low and pay your bills on time.
Be wary of non-prime lenders.
Some people want to buy a new home sooner than the waiting period associated with more traditional loans, so they head to non-prime lenders. These lenders may offer loans immediately following foreclosure, but be wary; these loans often come with high interest rates and less-than-ideal terms.
Bottom Line
If you have faced foreclosure and want to know if you can move forward on a new home purchase or just want to understand the process better, contact us. If you would like a copy of our "Facing Foreclosure" guide, contact us. We will send you a copy, and please note there is never an obligation or cost for our guides. We would be honored to assist you!
