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Friday, March 29, 2013

Can I Still Buy a Home After a Foreclosure?

by M.C. Postins, Demand Media

Losing your home to foreclosure can be a stressful journey. But it doesn’t mean that you’re forever barred from owning a home ever again. Whether you are lent money again to buy a home is really up to individual lenders, who have their own underwriting rules and requirements when it comes to foreclosed homeowners. You can do a few things, however, to enhance your chances of getting another loan.

Timing

The longer you wait to attempt to purchase a home after foreclosure can work in your favor. In many cases, lenders put an emphasis on the past 2 years of your credit history. So, while the foreclosure doesn’t go away from your credit report for 7 years, it becomes less of a factor in your credit score, one of the chief determinants of whether you can finance a new home. A foreclosure can lower your credit score by anywhere from 200 to 300 points for the first 2 years afterward, according to Mortgage Home Loan.

Credit Score

One way to improve your changes of buying a home after foreclosure is to improve your credit report. Liz Pulliam-Weston, a financial author, writes that you should start repairing your credit soon after your foreclosure with either an installment loan or revolving credit, such as a credit card. Whatever type of credit you receive, you should make sure that it reports to all three credit bureaus on a monthly basis. By getting credit and making on-time payments, it will raise your credit rating and make it more likely you can acquire financing. The interest rate may still not be that great, since the foreclosure will still be on your report.

If The Home Is Yours

If your home is in foreclosure, be sure to check your state’s foreclosure guidelines. Even after your home is sold at auction, some states offer Right of Redemption, a time period in which you have the right to buy back the home, even though someone else has bought it. In California, right of redemption is a 90-day to 1-year period, depending upon how much the lender received at auction. In either case, you must pay the entire loan, plus late payments, fees and costs, before the period expires, or the auction winner keeps the property.

Type of Mortgage

It matters what type of mortgage you are applying for after foreclosure. For instance, if you are applying for a government-backed mortgage, such as a loan from Freddie Mac, Fannie Mae or a mortgage insured by the Federal Housing Administration, then you cannot apply for a period of 5 years. The waiting period is 2 years if you surrendered your home through a deed in lieu of foreclosure or sold your home in a short sale. If you’re applying for an unconventional mortgage, such as one with a variable interest rate, it’s up to the individual lender.

Down Payment

The amount of your down payment may determine whether you have the capital to buy a home after foreclosure. The down payment is really up to your lender. But, according to CNN Money, some lenders may seek as much as a 30 percent down payment from you if you went through foreclosure, especially if you did little to try and save the home, which lenders consider a walkaway foreclosure. So, if you intend to buy afterward, be aware of what you may need to save for a down payment.

My name is Scott Grebner and I have been helping my clients realize their own personal real estate dreams. Real estate is a relationship-based business that works best when client relationships are built on trust and confidence. My goal is having clients be completely satisfied with the professional and caring service they have received.

The role of technology is rapidly changing how the real-estate market functions in this country today. Gerharter Realtors is embracing these new mediums of communication to better serve our customers. We have created our e-family to better place important information in your hands to help you with your housing needs. As a part of Gerharter Enterprises we have access to a broader range of additional services and resources to better assist you. Visit me at my Web Site, Blog, Facebook, Twitter, You Tube or Pinterest. Please check out our helpful resources on Sellers Tips, Buyers Tips, Foreclosure Tips, and Mortgage Tips. For a personal consultation please visit our Office.

It seems that the dream of past generations was to pay off a mortgage. The dream of today’s young families is to get one. I would love to hear from you, about your Real Estate Dreams and questions.

Email me at scott@gerharterrealtors.com.

2 comments:

  1. CFS Mortgage, http://www.cfsflex.com, has a flexible loan program. They allow a mortgage after a foreclosure, short sale, or chapter 7 bankruptcy. There is only a six month waiting period. This is perfect for individuals looking to become homeowners again.


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