Foreclosed Home Owners Can Still Qualify For a Future Mortgage Loan
Qualifying for a home loan is never an easy feat, but it’s an especially troubling scenario for those who have faced a past foreclosure. Luckily, many lenders are willing to overlook this blemish on your housing record, so long as you repair your credit and bide your time through a prescribed waiting period.
If you’re one of the millions who faced foreclosure during the 2008 housing crisis, you’ve likely surpassed the waiting period. If your foreclosure is more recent, you may be required to wait. However, conventional loan, VA loans and FHA loans are all still available to you.
These loans require great patience after foreclosure, as you’ll face a hefty seven-year waiting period. Though you may also be subject to stricter income and debt-to-income ratio guidelines, you may still qualify for a loan with quite favorable terms.
While VA loans aren’t available to everyone, military members and veterans who qualify will only be required to wait two years after a foreclosure before applying for a new loan. Of course, two years isn’t long to repair severely damaged credit, so it may take longer for some prospective buyers.
Recent rule changes by the Federal Housing Administration were put in place to recognize that sometimes a foreclosure is unavoidable due to a catastrophic financial event, such as a sudden job loss or medical diagnosis. If you have documentation to prove it, you can get a new FHA loan as little as a year after you foreclose. Even if you can’t prove a catastrophic event, you may apply for a loan after three years.
All home loan approvals require some semblance of healthy credit, so it’s important to take every step possible to repair your credit score after foreclosure. This includes paying all bills on time, reducing your debt load and shoring up your savings in order to enhance your ability to buy another home in the future.
Image via Flickr/cafecredit.com