For some people, having a home foreclosed upon can be an embarrassing and humiliating process. I watched this process unfold to a close family member and can tell you from personal experience that the pain foreclosure caused was very real. The foreclosure was a result of a small business failure and resultant personal bankruptcy where all personal assets were liquidated.
I can tell you with confidence that procuring mortgage loans after foreclosure is possible. The family member of which I speak has now been in their own home for many years and is doing fine. The key to getting mortgage loans after foreclosure has to do with time and repairing one’s credit rating.
The first thing you should do is start the process of repairing your credit for the first two to three years after a foreclosure. Pay your monthly bills on time and if necessary, try to negotiate a lower interest rate for your high interest credit cards. Start to save money for a down payment that will surely be needed next time to qualify for mortgage loans after foreclosure.
Even though a foreclosure judgment stays on your credit record for seven years you do not have to wait that long to qualify for mortgage loans after foreclosure. After about two to three years of starting to get your financial life back in order and with some money saved, you can then begin the process of looking for a mortgage again.
It might be too frightening and too soon to think of owning your own home again. Many people are still not ready two to three years after a foreclosure, which is perfectly fine. But if you are ready to look for mortgage loans after foreclosure this is the time frame you can realistically begin to look again.
Most mortgage lenders look back at the last three years of your credit history when they consider your application for a mortgage. If you have begun to clean up your credit that will show good faith on your part and will look good in the eyes of the mortgage lender. Having money for a sufficient down payment will also help you qualify for mortgage loans after foreclosure.
If your credit score is below 600 you will almost certainly be required to make a down payment of 5% to 20%. The larger the down payment you make better the rate you will get. Also, if you can make a down payment of 20% you can avoid Personal Mortgage Insurance (PMI), which can save you $50 per month on your mortgage payment.
When you begin the process of looking for mortgage loans after foreclosure you need to do some intense shopping around either online or in person to find the best loan available. The Internet is the best place to rate shop and makes best use of your time. It is unlikely that you will find a mortgage loan from traditional lenders like banks, credit unions or standard mortgage companies. You will most likely have to venture into the world of sub prime or high-risk lenders.
The best way to find a reliable sub prime lender is through an online mortgage broker. A good online mortgage broker can help you weed out any unscrupulous sub prime mortgage lenders. It is easy to make rate comparisons using an online mortgage broker and comparing rates from different lenders is critical to finding the lowest mortgage rate possible. Getting quotes from online lenders does not bind you to any offer but it does give you an accurate idea of exactly what you can expect in finding mortgage loans after foreclosure.
My personal advice to you is to keep your head up and remain positive because all is not lost after a home foreclosure. My family member is doing fine and the bankruptcy and foreclosure is a distant memory. We all have strengths that can see us through difficult times. I’m sure that with time and persistence, you, like my family member, will be back in your own home.