How to Buy a Home After a Deed-in-Lieu
Buy a home after a deed-in-lieu and become a homeowner again. While a deed-in-lieu is somewhat damaging to a borrower's credit score, it does avoid a foreclosure and a borrower can usually requalify for a mortgage loan within a few short years. Of course, buying a home after a deed-in-lieu entails meeting the loan requirements.
Other People Are Reading
Instructions
-
-
1
Prepare for a two-year wait period. Applying for a new mortgage within a few months of a deed-in-lieu will result in a rejection. On average, mortgage lenders wait a minimum of two years (sometimes three or four years) before considering applicants for new mortgages.
-
2
Improve payment history as you wait to apply for a new mortgage. Do not submit a late payment while waiting. Late payments and delinquencies look bad when applying for a mortgage, and indicate that you're likely to pay your mortgage late.
-
-
3
Develop a strategy for getting rid of your credit card debt and other loans. This not only frees up money for your new mortgage, but paying off balances help fix your credit rating. Cut back on expenses (eating out, shopping, recreation) or get another job to generate extra money.
-
4
Check your FICO score. Regularly monitor your FICO score to follow your progress. You can order your score from Myfico.com. Getting a mortgage requires a minimum credit rating of 680, says the Home Loan Learning Center.
-
5
Save your extra income. Plan to give your lender between 5 and 20 percent of the sale price as a down payment when you buy a home after a deed-in-lieu. The more you have to put down, the more likely the lender will approve your application and give you a favorable interest rate despite your mortgage history.
-
6
Get free loan quotes from conventional mortgage lenders and FHA mortgage lenders to compare offers and rates. Use a mortgage broker for easy and fast loan shopping. An FHA loan is generally easier for a borrower with less-than-perfect credit history to obtain.
-
1
