Can You Buy a Home After a Foreclosure?

Published by julia | Filed under Buyer / Seller Tips, Miscellaneous, Real Estate, Shout Outs, Uncategorized

If you’re wondering if you can purchase a new home after gonig through a recent foreclosure, the short answer is yes, However, it’s a difficult process that you shouldn’t jump into unprepared. Your credit is going to be damaged from the foreclosure, and as a result, many of the best lenders will be unwilling to work with you. This leaves you as attractive bait for bottom-feeder mortgage companies that may not be on the up and up. You need to be aware of this and avoid those companies. Plus, remember that even with a decent, medium-grade mortgage company, you’ll still be charged higher interest than you would if you had clean credit.

Obviously, you were foreclosed on because you were unable to make your house payments for a period of 3 months or longer. This situation may have come about for a variety of reasons, and your new mortgage lender will look at what those reasons were. Losing a job will be looked on more favorably than, say, if you were financially irresponsible and lived beyond your means (especially if you’ve since gotten a new job). Sure, that large, fancy home may have been attractive, but if you didn’t take utilities and other costs of owning it into consideration when you signed the morgage papers, you probably got yourself into quite a mess.

Most mortgage lenders, scrupulous or not, will not provide you with a new mortgage loan immediately following a foreclosure or bankruptcy. For the first few years, you’ll be considered a risky investment. While some companies may offer you a new mortgage as early as 6 months following a foreclosure, it may be better to wait even longer, as the interest rate you’ll be offered will be extraordinarily high.

The best approach to buying a house after foreclosure is to work on re-building your credit for a few years. Usually two to three years is sufficient. Try to open new credit accounts, make regular payments, pay on time, and pay off old debt. In two to three years after your foreclosure, you just may be in a perfect position to get a great deal on a new mortgage again.