How to Refinance Post-Foreclosure
Refinancing a home after going through foreclosure on another property will be extraordinarily difficult unless more than two years have passed since the foreclosure and your credit behavior has been exemplary since then. Expect to be required to explain why the foreclosure occurred and what steps you have taken to prevent such an event from happening again. Foreclosures are removed from a credit report after seven years.
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Instructions
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Order copies of your credit report from each of the major consumer credit bureaus (TransUnion, Equifax and Experian). Review the report for any errors or additional late payments or delinquent accounts that have accrued since your foreclosure.
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Contact the lender that processed your foreclosure and request a "pay for delete" agreement in writing. In general, lenders are not willing to delete negative items from credit reports unless you provide some sort of payment. Ask the lender how much you need to pay in return for deleting the entry from your report. If you can delete the foreclosure from your credit report, it will greatly enhance your ability to refinance current property.
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Compare refinancing loan quotes online using a free service such as MortgageLoan or BankRate. You will need to input information such as your credit score, income, the current balance of your mortgage and your home value. The rates you find using this method probably won't be the same as those you receive when you are approved, but the numbers will serve as guidelines.
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Apply for refinancing loans from the companies that made the best offers. Draft a letter explaining your foreclosure to include with your applications. If you communicate directly about the foreclosure in your application, the companies will be less likely to deny your application out of hand. You will be more likely to gain approval if your credit report shows good credit behavior aside from the foreclosure and if the foreclosure can be explained as a part of a temporary situation in your financial life.
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Complete the application process with the company that offers the most affordable rates at the best level of service to you. Review any fees attached to the refinancing loans to aid in your comparisons. You will likely need to pay more for refinancing than you would otherwise because of your history of foreclosure.
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