Things You'll Need:
- Knowledge of your credit score
- Credit report
- Budget
- Down Payment
- Savings
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Step 1
Wait for two years once the foreclosure shows up on your credit report before you start shopping around for a mortgage. Don’t be in a hurry to buy another home right after going into foreclosure. Chances are pretty high that you will be denied a home loan. Two years time will give you a chance to save some money for another down payment and show that you can pay your bills on time.
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Step 2
Save, save, save! During that two years, save everything you can. You’ll need to provide fifteen to twenty percent down on the home you are wanting to purchase. Putting money down might also lower the interest rate. You will be charged a higher interest rate since you have a foreclosure on your report. Putting money down will help lower that high interest rate. A down payment might be required because of the foreclosure on your credit report. Either way, be prepared with money in hand.
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Step 3
Pay your bills on time. Don’t skip or miss payments on bills, including utility bills, credit card payments, rent, etc. You want to have a good track record of making your payments on time since the foreclosure took place. Your lender will check to see if you have been able to make payments on time faithfully. Making payments on time can also help boost your credit score.
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Step 4
Create and follow a budget. You want to create a budget and “tell” your money where to go. By following a budget, you will be able to maximize the amount of money you save each month. Following a budget can be hard, but is rewarding when you watch your savings grow.
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Step 5
Buy a house you can afford. Find a house that allows you to live within your means. Don’t buy more than you can afford. Get a regular home loan, paying both principal and interest each month. Aim to pay it off as soon as you can. When looking at what you can afford, look at the monthly amounts for the mortgage, property taxes, and insurance. Aim to save some money each month as well.
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Step 6
Don’t give up! It can be very frustrating when trying to find a lender who will loan you money since you have a foreclosure on your credit report. Be straightforward with them. Explain the circumstances. For example, if you had to relocate out of state for work and couldn’t afford to rent the house out or sell it to pay back what was owed, let the lender know. Keep saving and pay your bills on time.
