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?
We filed bankruptcy approximately 10 years after my husband was injured and declared disabled. The bankruptcy was discharged in Nov, 2008. Now, we find out the company filed a foreclosure 7 days before the bankruptcy was discharged, and we didn't know anything about it. You mentioned only 2 years after foreclosure a loan can be secured. We have documentation of the injury and the bankruptcy, but under Hud, it is showing as a foreclosure. Would your company be able to loan to us?
Welcome Faye,
This is not a mortgage company but a mortgage community. You will have to contact the local lenders and apply for a loan. I hope you have improved your credit scores in these two years time. Good credit score and income plays an important role in getting a mortgage.
This is not a mortgage company but a mortgage community. You will have to contact the local lenders and apply for a loan. I hope you have improved your credit scores in these two years time. Good credit score and income plays an important role in getting a mortgage.
A) Does city or county tax foreclosure count in the same manner as foreclosure by the lender? (I mean as far as dates and time required to qualify for another mortgage.)
B) I keep reading "3-4 years" must pass before lenders will give you another loan after a foreclosure has been recorded. Which is it? 3 or 4? Does it just depend on the individual lender?
B) I keep reading "3-4 years" must pass before lenders will give you another loan after a foreclosure has been recorded. Which is it? 3 or 4? Does it just depend on the individual lender?
In regard to question B:
Is it 3-4 years for both conventional and FHA lenders?
Thanks so much!
Is it 3-4 years for both conventional and FHA lenders?
Thanks so much!
I have a credit score of 700, 20% down and no debt...the lenders I have been speaking with have told me I have to wait 4 years after foreclosure. It will be 3 years in Dec. Can I get decent mortgage?
Hi shebob,
It is good to note that you have a good credit score, required down payment and no other debts. However, you need to wait for 3-4 years in order to get a mortgage to buy a property. After you complete 3 years, you can start speaking to the local lenders to get a mortgage. In case, the lenders approve you for a loan, they may charge a high interest rate for the same.
Thanks
It is good to note that you have a good credit score, required down payment and no other debts. However, you need to wait for 3-4 years in order to get a mortgage to buy a property. After you complete 3 years, you can start speaking to the local lenders to get a mortgage. In case, the lenders approve you for a loan, they may charge a high interest rate for the same.
Thanks
I got in too deep (bought 3 houses), I lost them (last home foreclosed on 7 Aug 07) & then filed bankruptcy chapter 7 (my bankruptcy was discharged in mar 08) since then I have been working on my credit & have been told I have a 629 score, should I be able to get a new VA loan? (oh yeah, Im a disabled vet)
hi veteran,
as 2 years have passed since your chapter 7 bankruptcy discharge, you will be able to qualify for a va loan. you would require around 620 credit score in order to get a va loan. as you've the required score, i don't think you will face issues in getting a loan.
thanks,
jerry
as 2 years have passed since your chapter 7 bankruptcy discharge, you will be able to qualify for a va loan. you would require around 620 credit score in order to get a va loan. as you've the required score, i don't think you will face issues in getting a loan.
thanks,
jerry
My wife and I had our bankruptcy discharged in aug 2008. Our credit scores are above 660 and we're outgrowing our house quickly. However, come to find out our atty did not reaffirm our mortgage from Wells FArgo and on our credit repeort, it shows 'included in bankruptcy'. We never missed a payment in 6 years on this house but now our payments are not being reported to the credit bureau. #1-can we sell our house and keep the profits #2-Can we qualify for a new mortgage? Thanks
Hi jsonic,
As your mortgage was not reaffirmed when you were in bankruptcy, you are not personally liable for the dues. You will be able to sell off the property but the sale proceeds will go towards the loan dues. Though the mortgage has been discharged, the lender still holds the lien on the property. You will be able to qualify for FHA loan with the credit score that you have in your property.
Take care.
As your mortgage was not reaffirmed when you were in bankruptcy, you are not personally liable for the dues. You will be able to sell off the property but the sale proceeds will go towards the loan dues. Though the mortgage has been discharged, the lender still holds the lien on the property. You will be able to qualify for FHA loan with the credit score that you have in your property.
Take care.
How can i purchase another home after i have forclosed and how long is the waiting period after forclosure :?: :cry:
I filed a Chapter 7 in Dec 2008. I petitioned to keep my house but everything was discharged and the house was not reaffirmed. I still make my monthly payments on time but have had so many problems with the house- I lost 1/2 of my home (Finished basement)when after a flood-the sellers did not disclose and hid black mold behind walls) 3 months to the day of purchase so I had been making due with 1/2 a home and gutted basement.
I was recently remarried, now a family of 4 and would like to start over. the value has dropped over $50,000 on what is owed and we are very frustrated.
I understand that I am not obligated to pay since the property was discharged and that the bank can foreclose on the house. We found a great property from a friend who is willing to wait until the date when my discharge will be 2 years. If the current house has already been discharged and it does foreclose or I request a deed in lieu 1) will the foreclosure/deed in lieu show on my credit report? and 2) will it prevent me from being able to get a mortgage for a new home?
We just want a fresh start and morally are not comfortable selling the house because of the problems we had and the fact that it is already discharged and would not sell for what is owed anyway. We really need guidance as our #1 goal is to get a mortgage for a new home for our family in a home that is 1) safe and 2) large enough for our growing family.
Thank you for your help!
I was recently remarried, now a family of 4 and would like to start over. the value has dropped over $50,000 on what is owed and we are very frustrated.
I understand that I am not obligated to pay since the property was discharged and that the bank can foreclose on the house. We found a great property from a friend who is willing to wait until the date when my discharge will be 2 years. If the current house has already been discharged and it does foreclose or I request a deed in lieu 1) will the foreclosure/deed in lieu show on my credit report? and 2) will it prevent me from being able to get a mortgage for a new home?
We just want a fresh start and morally are not comfortable selling the house because of the problems we had and the fact that it is already discharged and would not sell for what is owed anyway. We really need guidance as our #1 goal is to get a mortgage for a new home for our family in a home that is 1) safe and 2) large enough for our growing family.
Thank you for your help!
I filed a Chapter 7 in Dec 2008. I petitioned to keep my house but everything was discharged and the house was not reaffirmed. I still make my monthly payments on time but have had so many problems with the house- I lost 1/2 of my home (Finished basement)when after a flood-the sellers did not disclose and hid black mold behind walls) 3 months to the day of purchase so I had been making due with 1/2 a home and gutted basement.
I was recently remarried, now a family of 4 and would like to start over. the value has dropped over $50,000 on what is owed and we are very frustrated.
I understand that I am not obligated to pay since the property was discharged and that the bank can foreclose on the house. We found a great property from a friend who is willing to wait until the date when my discharge will be 2 years. If the current house has already been discharged and it does foreclose or I request a deed in lieu 1) will the foreclosure/deed in lieu show on my credit report? and 2) will it prevent me from being able to get a mortgage for a new home?
We just want a fresh start and morally are not comfortable selling the house because of the problems we had and the fact that it is already discharged and would not sell for what is owed anyway. We really need guidance as our #1 goal is to get a mortgage for a new home for our family in a home that is 1) safe and 2) large enough for our growing family.
Thank you for your help!
I was recently remarried, now a family of 4 and would like to start over. the value has dropped over $50,000 on what is owed and we are very frustrated.
I understand that I am not obligated to pay since the property was discharged and that the bank can foreclose on the house. We found a great property from a friend who is willing to wait until the date when my discharge will be 2 years. If the current house has already been discharged and it does foreclose or I request a deed in lieu 1) will the foreclosure/deed in lieu show on my credit report? and 2) will it prevent me from being able to get a mortgage for a new home?
We just want a fresh start and morally are not comfortable selling the house because of the problems we had and the fact that it is already discharged and would not sell for what is owed anyway. We really need guidance as our #1 goal is to get a mortgage for a new home for our family in a home that is 1) safe and 2) large enough for our growing family.
Thank you for your help!