Going through a foreclosure is no small deal and it is not an easy one either. Many past homeowners begin to give up hope of ever owning a home again after they have been through a foreclosure, but there is a chance you can qualify for a home loan again.
It is actually an easier process than some may think. The ability to qualify for a new loan depends on the particular circumstances of your foreclosure and how you have managed items like your credit since.
Here are some factors of qualifying for a loan and getting a mortgage after foreclosure.
How Long Should You Wait to Apply?
When it comes to a required waiting period after a foreclosure, each lender has its own set of rules. There are however some general rules of thumb on waiting periods as pertaining to different types of loans. A conventional loan has a general waiting period of 7 years, an FHA loan a period of three years, which is the same for USDA loans. A VA loan, generally requires a two year waiting period.
Can You Speed Up the Process?
The waiting period can be reduced if your foreclosure was the result of uncontrollable financial hardship from which you have recovered. This must be provable with means beyond words. This does not include situations like getting caught up in a shopping addiction. These are situations along the lines of a divorce, major health issues, a business failure, or an economic recession.
In addition to documentation showing the hardship and recovery, should be an explanation letter.
It is good to know, that the parameters for financial hardship are different among lenders. For example: some do not look at divorce as an uncontrollable financial hardship. Do not be embarrassed, but do be prepared to explain situations that could stir up these feelings.
Rebuilding Your Credit will Help
A large component that speaks to a lender of your dependability is building your credit score back up. It is a good way to tangibly show you are making responsible financial choices. To boost your credit score, pay all current bills on time and maintain low balances on any credit cards. It is a good idea to go over every item in your credit report to ensure it is accurate as many people have things that were reported incorrectly which bring down their score that had nothing to do with them.
Keep Your Paperwork
File all the paperwork related to your finances after the foreclosure. This can include pay stubs, bank statements, tax returns, credit statements, etc. Lenders will want to see this paperwork to verify the facts in the mortgage application and as a precaution of lending out money.
Save a Down Payment
Be prepared to be asked for a bigger down payment as compared to not having a foreclosure on your record. Expect around a 10% minimum down payment requirement.
For more information on your mortgage options in Mission Viejo and California after foreclosure please contact me any time.
For more information on buying after foreclosure and all of your mortgage options in Mission Viejo and California please contact me anytime.
For help finding the right type of mortgage in California please contact me at any time.
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