If you are one of the many American homeowners who went into foreclosure early in the housing crisis a few years ago, you probably already know that recovering from such a negative event is an uphill battle that can take up to seven years. Getting access to loans during this seven-year period is challenging, especially during the first two or three years. While it is still possible to get approved for a credit card or car loan during this time, you will most likely be charged high interest rates. Finding a lender who will give you a mortgage while you still have a black mark on your credit record will be very difficult, but it can be done. Here are a few tips on how you can increase your chances of getting a mortgage after a foreclosure:
1. Strategically time your application. If you only have a few more months left before your foreclosure or any other negative credit event gets removed from your credit report, you could benefit by waiting it out before you apply for a mortgage. Potential lenders will then not see that you went through a foreclosure, decreasing your chances of getting rejected or charged a higher interest rate. However, if you still have more than a year to go before the foreclosure gets removed from your credit report, it may make more sense for you to just go ahead and apply for a mortgage now. Mortgage rates could get higher in the years to come, and you could end up getting a better interest rate now–even with a lower credit score–than if you waited until after the foreclosure is removed from your credit report.
2. Pay off your credit card debt. This is one of the fastest ways you can improve your FICO score, so you should definitely do so if you can. Even if you can’t afford to pay off your credit card debt entirely, you should still try and pay off as much of it as you can.
3. Avoid applying for other financing while you’re trying to get a mortgage. Applying for a car loan, credit card or other kinds of loans could hurt your chances of getting approved for a mortgage while your credit score is still low. Hold off until after you get approved for a mortgage before applying for anything else.
If you are planning to buy a home, let The Incorvaia Team make the process as easy as possible for you. Call us at 440-879-7130 today!
