Posted on: 04th Oct, 2007 06:16pm
If you've been in foreclosure, your credit must have trashed down and this is what will stop you from buying a home or qualifying for a new mortgage after foreclosure. You'll have to organize your finances and get financially stronger prior to getting a home loan again.
You can try getting a loan 1 year after foreclosure but chances are you'll be charged with very high rates. The best thing is to wait for at least 2-4 years to get the better and lower rates on your new loan. Even if you'd like to get a mortgage after 2 years, you can try out with FHA loans but you need to have minimum score of 580-600 especially in times of mortgage and housing crisis.
You can try getting a loan 1 year after foreclosure but chances are you'll be charged with very high rates. The best thing is to wait for at least 2-4 years to get the better and lower rates on your new loan. Even if you'd like to get a mortgage after 2 years, you can try out with FHA loans but you need to have minimum score of 580-600 especially in times of mortgage and housing crisis.
5 Tips to qualify for Mortgage after Foreclosure
Here are 5 Do's to help you get a home loan after foreclosure.
Once you've been in foreclosure, what the new lender will check is how your credit has been used since the financial hardship that led to foreclosure, and how much you'll be able to put down on the new house. In fact, banks may not lend more than 75-80% of the home purchase price to anyone having gone through foreclosure in the past 2 years or so. So, it's important that you have a savings plan and adequate cash reserves.
- Rebuild your credit:
Getting mortgage months after foreclosure may not be impossible but you should be prepared to accept higher rates of interest. For eg: you may be paying 8.20% rate with 2 points for 30 year fixed rate loan while anyone having good credit and not being in a recent foreclosure may get a 6.20% rate with 0 points. So, what you need doing is to rebuild your credit before you apply again.
The best thing is to make on-time payments on bills, credit cards etc. If possible, negotiate to lower the interest rate on your credit cards as that will help you save more. Also check your credit report for any inaccurate information being reported to the bureaus.
You may open new credit accounts but maintain regular payments - this is what lenders will be concerned about when you look out for a new mortgage. Know more... - Save for down payment:
To get the best loan program, you'll have to put down 15-20% of the home purchase price as the down payment. The more you put down, the less you need to borrow and the less you need to pay. - Prepare a budget:
Make sure that you plan a budget and spend according to it. A budget will help you maximize your savings. Use the Simple budgeting tool to plan your budget on a monthly basis. When you start budgeting, try saving some cash in an emergency fund as cash reserves help in qualifying for a mortgage loan. - Check your affordability:
Go for a house that is affordable. Also, calculate the monthly payments (including property taxes and insurance premiums) on your new loan and see if it's well within your reach. Use the Home Affordability Calculator to find out how much you can afford. - Check the housing market:
Even though you may save enough and rebuild you credit, it's important to check the housing market in your area. If you're in a declining market, be careful when you buy. Chances are, if you default, you may be unable to retrieve the loan balance by selling off your home as a result of declining home prices.
At times, certain lenders inflate appraisals and offer more money than the buyer is supposed to get. Make sure that you don't get an inflated appraisal or else you'll be paying more than you should. And later on you may not be able to repay thereby ending up in foreclosure.
Once you've been in foreclosure, what the new lender will check is how your credit has been used since the financial hardship that led to foreclosure, and how much you'll be able to put down on the new house. In fact, banks may not lend more than 75-80% of the home purchase price to anyone having gone through foreclosure in the past 2 years or so. So, it's important that you have a savings plan and adequate cash reserves.
How difficult is it to get another home mortgage after a foreclosure? Also van anybody tell me how to qualify for mortgage after foreclosure?
discharged from ch7 12/09, my house was included in the bk. our credit score now is 650 and 640, we have $10,000 for a down payment. We still live in this house, but have not reaffirmed, we plan on doing a short sale. we were told by someone that if we secure a home mtg in 12/2011,wiht another lender , before we sell our current home, so it does not show up on our credit report, before we purchase anoether home? is this true
hi guest!
welcome to forums!
after a chapter 7 bankruptcy discharge, you'll have to wait for 4 years in order to qualify for a mortgage. so, it's better to short sale the property now and then wait for sometime and then apply for a new mortgage to buy another home.
feel free to ask if you've further queries.
sussane
welcome to forums!
after a chapter 7 bankruptcy discharge, you'll have to wait for 4 years in order to qualify for a mortgage. so, it's better to short sale the property now and then wait for sometime and then apply for a new mortgage to buy another home.
feel free to ask if you've further queries.
sussane
My boyfriend included his home loan when he filed Ch 13 6 years ago. In Sept of last year he hired an agent to short sale the house. The agent found a buyer and however at closing we were told the home was forclosed on De 2 2010.
Now he is trying to purchase a USDA home and has qualified so far because the foreclosure isnt showing on any credit reports, is it showing as a paid debt through the bank. The loan passes underwriting. Will USDA approve?
Now he is trying to purchase a USDA home and has qualified so far because the foreclosure isnt showing on any credit reports, is it showing as a paid debt through the bank. The loan passes underwriting. Will USDA approve?
Hi Guest,
If the credit report mentions that the debt has been paid off, then I don't think your boyfriend will face any problems in getting a USDA loan.
Thanks
If the credit report mentions that the debt has been paid off, then I don't think your boyfriend will face any problems in getting a USDA loan.
Thanks
I was foreclosed upon about a year ago and found a house I want to purchase for a very low price. Other than the foreclosure I have a blemish-free credit history. Even with a fresh foreclosure on my record, I still have a credit score around 670. I want to get this house, but would like to know which lenders I should speak to that will be most willing to work with me on a loan less than $90,000.
Welcome Jacenda,
Though you have a credit score of 670, you won't be able to get a loan before 2-3 years since your foreclosure. Prior to that, none of the lenders will be ready to give you a new mortgage.
Though you have a credit score of 670, you won't be able to get a loan before 2-3 years since your foreclosure. Prior to that, none of the lenders will be ready to give you a new mortgage.
we are refinancing our home. foreclosure was started in may 2008 and dismissed in september 2008 because we caught up all of the payments. Underwriter will not approve the refininace because of this. It never was foreclosed on so why reject the loan? Credit scores great and even paid off a credit card to give us more points on score
hi tamma!
welcome to forums!
you should speak to the underwriter so that he understands your situation and let's you refinance the loan. if you have documents related to the dismissal of the foreclosure, then you can even show them to him. this can make things easy for you.
feel free to ask if you've further queries.
sussane
welcome to forums!
you should speak to the underwriter so that he understands your situation and let's you refinance the loan. if you have documents related to the dismissal of the foreclosure, then you can even show them to him. this can make things easy for you.
feel free to ask if you've further queries.
sussane
They do have access to the records, the order to dismiss was september of 2008, yet the local judge did not sign until Jan 09. Underwriter states that it has to be a full 3 years before they touch it. I was under the impression that the 3 years would apply if we actually were foreclosed on, not the case if it were dismissed. Very disappointed!!
Welcome TAMMA,
It is true that 3 years would have been applied if your property would have been foreclosed by the lender. As the foreclosure was dismissed by the lender, then the underwriter should approve you for the refinance. It is strange that the underwriter is not ready to let you refinance the loan.
It is true that 3 years would have been applied if your property would have been foreclosed by the lender. As the foreclosure was dismissed by the lender, then the underwriter should approve you for the refinance. It is strange that the underwriter is not ready to let you refinance the loan.
Im looking for a lender. the foreclosure was almost a year ago and I was only on title not the loan. credit score is over 725. Need help!! thanks
As the loan was not in your name, the foreclosure must have not affected your credit in any way. You should contact the local lenders and apply for a mortgage. If you have a stable income, you will be able to qualify for a loan. This community has a large number of lenders. You can seek a no obligation free mortgage quote from them and check out if they can help you with a loan.
We had a short sale with late pays in 2010, and are looking at possibilities for buying another home but it has not yet been two years. If we are able to come up with a 25%+ down-payment (thus not needing PMI), what are the chances of being able to get a loan?