Getting a Mortgage After a Foreclosure
More than 5 million American families lost their homes to foreclosure between 2007-2014. Recovering from a foreclosure can take its toll on borrowers. The good news is that people who lost their homes during the housing crisis are now becoming eligible for a mortgage again.
What can you do in order to be ready to buy a home after a foreclosure? Here are a few things you can do to improve your chances of getting approved:
Improve your credit score
Foreclosures stay on your credit report for up to seven years. FICO credit scores range from 300 to 850. The better your score, the better the loan terms offered. Most lenders require at least a 620 to 660 score. One of the fastest ways to improve your FICO credit score is to pay down your credit card debt, or even pay it off entirely. The change can be reflected on your credit report within a month and can quickly change your score. You can check your credit report for free once every 12 months at www.annualcreditreport.com.
Wait to apply for other loans
Applying for furniture, department store financing and other loans can hurt your chances of getting approved for a mortgage. The applications you make within a year prior to applying for a home loan may lower your credit score.
Wait some more…
You may be anxious to apply for a home loan. But, sometimes it is better to wait until a foreclosure or other negative credit is removed from their credit report. Do your best to make certain your negative credit is cleared from your credit report.
In some circumstances, you may not have to wait seven years (that is what most conventional mortgages require) after foreclosure to apply for a mortgage. The Federal Housing Administration (FHA) generally has a three year wait while veterans can apply for a VA loan two years after a foreclosure. There’s also an FHA program called “Extenuating Circumstances” that waives the three-year waiting period. So, there are options that can be taken advantage of.
Feel free to call or email me so we can figure out which loan program is right for you. Getting a mortgage after a foreclosure is possible. We offer free consultations and look forward to hearing from you.
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