How to Get a Mortgage With a Past Foreclosure
Eligibility for a mortgage can be a treacherous and complicated venture, especially if you have previously foreclosed on a real estate property. A forclosure is disclosed in your personal credit file, and it can have a damaging impact on your ability to get a new loan. It is still possible to get a new mortgage loan on a home, however, even if you have had a foreclosure. The amount of time that has passed since your forclosure and your current post-forclosure credit history are two important factors that influence your ability to qualify for a new home loan.
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Instructions
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Stay up to date on all of your current bills and expenses. After a foreclosure, banks and mortgage lenders examine your entire credit history to see if you have been faithfully paying all of your current outstanding financial obligations. Late payments, unsatisfied debts and overdue balances reflect poorly on your ability to pay off a new mortgage. According to the website Mortgage Fit, it is best to wait two to four years after a foreclosure before applying for a new mortgage. In that length of time, you should be able to show a solid and credible credit history.
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Visit a mortgage lender and discuss potential home loan options. Some banks have flexible loan programs for potential homebuyers who suffered a foreclosure due to a loss of employment, sickness, divorce or force majeure. Provide a mortgage lender will all details and financial documents explaining why you were forced to forclose on your property. If the foreclosure was a result of extenuating circumstances, a lender will be more likely to offer you an acceptable mortgage option than if you simply exceeded your budget and were careless in your financial spending.
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Apply and pre-qualify for a home loan with several mortgage lending agencies or banks. After a foreclosure, it is best to pre-qualify for a mortgage loan before you attempt to make an offer on a property. If you pre-qualify with a couple of banks or lenders, you will have alternative financing available if one bank decides not to follow through with the loan. During the application and pre-qualification process, disclose all current financial obligations, income sources and payment plans. Once again, banks will want to see that you have been consistent with all of your recent payments to other institutions. This will also give you the ability to compare and consider various interest rates.
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Tips & Warnings
Prepare a monthly budget and show potential mortgage lenders the funds that you have available for a new home. Provide lenders with proof of your ability to pay a down payment on the property and have pay stubs available for verification.
After a foreclosure, avoid adjustable rate mortgages. Choose mortgages that have defined terms, interest rates and established payment schedules.
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