How to Obtain Another Mortgage Loan After Foreclosure
Part of the American Dream is about owning a home of ones own. People spend their lives, energy, and finances in pursuit of such realizations and they are usually obtained through large mortgages. Many homebuyers believe their good jobs and promising circumstances will last until the mortgage is paid off.
However, situations can change rapidly, leaving homeowners in dire financial trouble that can quickly lead to foreclosure and loss of their dream home. The latest economic crisis that began in earnest in 2008 has seen 4.4 million foreclosures to date. Another 2.3 million mortgages are 90 days or more delinquent and on their way to foreclosure.
If you have lost your home to foreclosure, or on the fast track to losing your home, there are some steps you will need to take in order to gain another mortgage after foreclosure.
Be Patient
It can be extremely frustrating to lose the home in which you and your family were settled and comfortable. Many folks want to jump back out and regain that familiarity by purchasing another home as soon as possible.
However, it can take an extended period of time before you have regained the financial shape required to land another mortgage. Seven years is the normal waiting period before another home can be purchased after foreclosure. In the majority of cases, people lose their homes due to bad financial situations that arise due to mismanagement of finances.
It is possible that the waiting period for reapplying for a mortgage might only be three years if the loss occurred due to extenuating circumstances. This is when you lose financial control because of a significant and prolonged income reduction or catastrophic circumstances. In such cases, detailed documentation will need to be provided that show the reasons for such sudden losses.
Shore Up Your Credit
Waiting the required time period after a foreclosure does not guarantee that you will obtain another mortgage. You must also repair your credit that has been damaged by the action, leaving your credit score after foreclosure extremely low. Foreclosures leave powerfully negative marks on credit reports. Therefore, use the waiting period to shore up your credit and prepare for the next home-buying attempt.
The first thing you should do is to begin consolidating bills, paying off debts (especially unsecured credit cards), and then closely monitor your credit reports that are available to you. By utilizing your time wisely, you can get your finances back in shape so that lenders will readily see that you have made the effort to regain financial control.
Create Stability and Savings
Two other obstacles to buying a home after foreclosure are job security and available savings. Even though you have shored up your credit, most lenders wo not give you a mortgage if you do not have steady employment and a significant amount of cash to place down on the home.
Therefore, you should take these additional actions during your waiting period. Seek out and find secure employment that provides sufficient income to land another home mortgage. Also, focus on accumulating savings that will be sufficient enough to meet the large down payment required after foreclosure, as well as the closing costs, taxes and other associated fees.
Be Open and Honest
Lastly, when it comes time to seek out lenders for a new mortgage, ensure that you are open and honest about your past circumstances. It can be embarrassing to admit to financial problems that led to a past foreclosure, but trying to lie to lenders and avoid such revelations will only work against you. Mortgage lenders have access to your financial background and they are very keen when it comes to financial dealings.
Therefore, openly communicate with your lenders and let them know why you fell into foreclosure in the past. If you have effectively followed the previous steps then they will see that you have made the effort necessary to regain your financial composure and will be more likely to grant you another home mortgage loan.
If you are buying a foreclosed home, there are also certain steps that you will need to take such as performing detailed research, learn as much as you can about properties in which you are interested, and carefully look over each one.
However, situations can change rapidly, leaving homeowners in dire financial trouble that can quickly lead to foreclosure and loss of their dream home. The latest economic crisis that began in earnest in 2008 has seen 4.4 million foreclosures to date. Another 2.3 million mortgages are 90 days or more delinquent and on their way to foreclosure.
If you have lost your home to foreclosure, or on the fast track to losing your home, there are some steps you will need to take in order to gain another mortgage after foreclosure.
Be Patient
It can be extremely frustrating to lose the home in which you and your family were settled and comfortable. Many folks want to jump back out and regain that familiarity by purchasing another home as soon as possible.
However, it can take an extended period of time before you have regained the financial shape required to land another mortgage. Seven years is the normal waiting period before another home can be purchased after foreclosure. In the majority of cases, people lose their homes due to bad financial situations that arise due to mismanagement of finances.
It is possible that the waiting period for reapplying for a mortgage might only be three years if the loss occurred due to extenuating circumstances. This is when you lose financial control because of a significant and prolonged income reduction or catastrophic circumstances. In such cases, detailed documentation will need to be provided that show the reasons for such sudden losses.
Shore Up Your Credit
Waiting the required time period after a foreclosure does not guarantee that you will obtain another mortgage. You must also repair your credit that has been damaged by the action, leaving your credit score after foreclosure extremely low. Foreclosures leave powerfully negative marks on credit reports. Therefore, use the waiting period to shore up your credit and prepare for the next home-buying attempt.
The first thing you should do is to begin consolidating bills, paying off debts (especially unsecured credit cards), and then closely monitor your credit reports that are available to you. By utilizing your time wisely, you can get your finances back in shape so that lenders will readily see that you have made the effort to regain financial control.
Create Stability and Savings
Two other obstacles to buying a home after foreclosure are job security and available savings. Even though you have shored up your credit, most lenders wo not give you a mortgage if you do not have steady employment and a significant amount of cash to place down on the home.
Therefore, you should take these additional actions during your waiting period. Seek out and find secure employment that provides sufficient income to land another home mortgage. Also, focus on accumulating savings that will be sufficient enough to meet the large down payment required after foreclosure, as well as the closing costs, taxes and other associated fees.
Be Open and Honest
Lastly, when it comes time to seek out lenders for a new mortgage, ensure that you are open and honest about your past circumstances. It can be embarrassing to admit to financial problems that led to a past foreclosure, but trying to lie to lenders and avoid such revelations will only work against you. Mortgage lenders have access to your financial background and they are very keen when it comes to financial dealings.
Therefore, openly communicate with your lenders and let them know why you fell into foreclosure in the past. If you have effectively followed the previous steps then they will see that you have made the effort necessary to regain your financial composure and will be more likely to grant you another home mortgage loan.
If you are buying a foreclosed home, there are also certain steps that you will need to take such as performing detailed research, learn as much as you can about properties in which you are interested, and carefully look over each one.
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