Getting back into the home buying market after a foreclosure is daunting, but not as uncommon as you might think. The housing crisis a decade ago left millions of homeowners in foreclosure, but many have already overcome the higher hurdles of buying their next home.
If you have a foreclosure in your past, it’s important to have a plan that creates a solid foundation for future home ownership.
Speak to a Mortgage Lender
One of the best first steps for a buyer who has gone through a foreclosure is to start planning early. A mortgage lender can help review your credit report and discuss mortgage options with you. Buyers may have to wait as many as seven years after the completion of a foreclosure before they can obtain a new loan. However, this can drop to three years or less depending on the type of loan and circumstances of the foreclosure. A lender can determine where you stand based on your specific situation.
Determining a reasonable timeline will also give you a chance to put a savings plan in place. With a less than perfect credit history, it’s almost certain that a down payment will be required to purchase your next home. With a little forward thinking and a lot of determination, you can align your down payment goal with your mortgage eligibility and avoid prolonging the process more than necessary.
Clean up your Credit
A foreclosure will be less alarming to a lender if it’s the only blemish on your credit report. Combine it with missed payments and unpaid balances, and it may be too much to overcome. Time is the only remedy for the foreclosure, but don’t forget to be proactive in re-establishing your credit and cleaning up the aspects that are still in your control.
If your past has you worried about buying a home in the future, contact Open Mortgage to start creating a plan that will work for you.