If you've recently had a foreclosure, it's possible to buy a home, but don't rush into mortgage. Your credit standing isn't that good, and many lenders will take advantage of that. Your options aren't that many. But this doesn't mean you have to settle for a mortgage loan that isn't any good.
Why Does a Foreclosure Occur?
Homes can be foreclosed when the homeowner cannot repay the mortgage. Mostly, a lender would begin the pre-foreclosure process when the mortgage payments are 3 months late. Of course if the homeowner can procure funds, then the lender will stop foreclosure.
Many factors contribute to a homeowner's inability to repay a mortgage loan. For starters, living beyond one's means will make it harder to maintain regular monthly payments. There are so many people who want homes that they cannot afford.
Furthermore, some homeowners do not take into consideration utilities and other expenses that come with owning a larger home. Acquiring excessive credit card debt may also result in less disposable income.
Buying A House After Foreclosure: The Disadvantages
Most lenders would not approve mortgage loans immediately following a bankruptcy. You are a very risky applicant for them. It's very much possible that a future loan to you would just default if you are unable to make regular payments 3 months prior.
Naturally, circumstances do change for the better. For example, if foreclosure was the result of a lost job or ill health, then you're in a better position to afford a mortgage 6 months after the foreclosure. But it's still not that good of an idea to buy a home even after 6 months from the foreclosure.
Mortgage interest rates following a foreclosure are outrageously high. You'll be subjected to interest rates that are 3 to 4% higher than the usual. This means there will be an increase of a few hundred dollars in your monthly payments.
What You Should Do
If you are hoping to buy a home following a foreclosure, be patient. The key is to rebuild your credit. During the next 24 months, attempt to open new credit accounts, and maintain regular payments. Avoid missing payments.
Next, shop smartly for a new mortgage. You should also contact several lenders to get quotes before you make a final decision. You can get instant quotes online.
Why Does a Foreclosure Occur?
Homes can be foreclosed when the homeowner cannot repay the mortgage. Mostly, a lender would begin the pre-foreclosure process when the mortgage payments are 3 months late. Of course if the homeowner can procure funds, then the lender will stop foreclosure.
Many factors contribute to a homeowner's inability to repay a mortgage loan. For starters, living beyond one's means will make it harder to maintain regular monthly payments. There are so many people who want homes that they cannot afford.
Furthermore, some homeowners do not take into consideration utilities and other expenses that come with owning a larger home. Acquiring excessive credit card debt may also result in less disposable income.
Buying A House After Foreclosure: The Disadvantages
Most lenders would not approve mortgage loans immediately following a bankruptcy. You are a very risky applicant for them. It's very much possible that a future loan to you would just default if you are unable to make regular payments 3 months prior.
Naturally, circumstances do change for the better. For example, if foreclosure was the result of a lost job or ill health, then you're in a better position to afford a mortgage 6 months after the foreclosure. But it's still not that good of an idea to buy a home even after 6 months from the foreclosure.
Mortgage interest rates following a foreclosure are outrageously high. You'll be subjected to interest rates that are 3 to 4% higher than the usual. This means there will be an increase of a few hundred dollars in your monthly payments.
What You Should Do
If you are hoping to buy a home following a foreclosure, be patient. The key is to rebuild your credit. During the next 24 months, attempt to open new credit accounts, and maintain regular payments. Avoid missing payments.
Next, shop smartly for a new mortgage. You should also contact several lenders to get quotes before you make a final decision. You can get instant quotes online.
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