Obtaining a mortgage after foreclosure is not only possible, but also easier than you many think. This is not to say that lenders will be knocking on your door begging to borrow you money to purchase a home, but obtaining a mortgage after foreclose is definitely possible. Many lenders may hesitate to give a mortgage to an individual that lost their home to foreclosure, but many are willing to help when they see your financial situation has improved.
When you lose your home by foreclosure, it’s not the end of the world, although it may seem that way. Your dreams of owning another home are still possible with a little work and a lot of careful spending and saving. Getting your credit scores back up where they belong is the first step towards obtaining a mortgage after foreclosure. Rebuilding your credit needs to be your top priority. Some people try immediately to get a mortgage to purchase a new home. You will find some lenders that are willing to help you in this endeavor, although many may be apprehensive immediately after a foreclosure.
If you get a mortgage shortly after a foreclosure, you will probably be charged a high interest rate. In some cases, they may even require a co-signer or excessive collateral. Make sure you make your mortgage payments (as well as your other bills) on time EVERY MONTH. Nothing will rebuild your credit scores faster than payments made on time. In a year or two, when your credit scores are higher, you can refinance your mortgage and get a lower credit rating. Banks will be more willing to help you after you’ve proved your credit worthiness.
If your hopes of obtaining a mortgage after foreclosure include low interest rates, you’ll have to wait a year or two to rebuild your credit before you apply. Use this time to reevaluate your spending habits and what caused your foreclosure. Determine where you can cut back on your spending and do so.
The extra cash you have from cutting your excess spending can be used to start saving a down payment for your next home. During this time, it’s important to make all your payments on time so your credit scores will increase. Lenders may not hold it against you that you lost your home to foreclosure, if they still see low credit scores and poor pay history two years later, they will not be willing to give you a mortgage.
When obtaining a mortgage after foreclosure, don’t grab the first lender you find. Shop around for different lenders and mortgage brokers. Mortgage brokers are often your best choice for obtaining a mortgage after foreclosure. They will offer your financial information to a group of lending institutions to find the best package for you. Soon, your dreams of home ownership will once again be a reality.