Buying A House After Foreclosure – Foreclosure is looming for many people, but this doesn’t have to be the last house you they ever purchase. After foreclosure, buying a house might be difficult, but it is not impossible. You can still do it, but it is going to take some time.
Each month, a record number of people enter foreclosure or are processed. Many people flat out bought more home than they could afford, were laid off and can’t find employment, or are strategically walking away from their properties. The end results are the same. They end up with a foreclosure on their credit report, which will ruin your perfect credit score.
Buying A House After Foreclosure
Buying A House After Foreclosure
The goal of today’s article is to show you how to come back from foreclosure. Put yourself into a position of buying a house. Take control of your life and finances after the foreclosure process is done.
Let’s get into these basic steps and see how you can come back. It is not impossible, but you are going to have to make some tough decisions, display your will power, and see it through to the end.
Decide – If you have been reading Invest With Passion, then you know we believe everything you do in life and finances starts with a decision. You have to make up your mind and decide you are going to get your credit together and work towards buying a new home despite your foreclosure past.
It Is Going to Take Some Time – This might be the hardest part of the process. You have to wait. It is highly unlikely you will be able to purchase a home fresh off of your foreclosure. Therefore, you are going to need some time to build up your credit score and credit worthiness.
This is a just a temporary state. You are not going to have bad credit forever, just a period after the foreclosure things might look bad. Don’t be discouraged. You can work your way out of this situation.
Stop the Bleeding in Your Credit Report – It is important to slow down, then stop the number of negatives reporting on your credit. It is unlikely if you are going through or have gone through a foreclosure that your home was the only bill you didn’t pay. You probably had more credit card bills and such that you are delinquent on as well.
These are reporting negatively on your credit as well. You must stop the bleeding by either calling and setting up a payment plan with these people or pay the bills off completely. The choice is yours, but if you are expecting to get your credit standing back one or the other will need to be done.
Build New Credit - After the bleeding has been stopped or substantially slowed, the goal is to start applying for some new credit. It doesn’t have to be an American Express card, but you need to get started with new credit. You can apply for store credit cards, which typically carry higher interest rates, but are easier to get accepted for or you can get yourself some secure credit cards.
Secure credit is where you put down say $500 to a company and they will give you $500 worth of credit to use. Yes, you are using your own money to build credit. These companies report to the credit bureaus regularly as you need to re-establish your credit.
Get Pre-Approved For A Home Loan – The steps above may take a few years to carry out, which is fine. Remember, we said this was going to take some time, but eventually you will come from under this foreclosure situation to re-establish your credit.
The next step is to get pre-approved for a home loan. There are many lenders out there willing to take a risk on you again and loan you money for a home. They know that you have felt the burn and should not make the same mistakes twice in your life. Do a little research and you can find them easily.
Apply the 31% Rule When Purchasing – This time around you don’t want to fool yourself. You want to make sure you are in a secure situation with you home. Many of the people who got in trouble in this housing crisis were people who purchased too much home. The bought more home than they could afford.
This time around, you want to make sure your home mortgage is not more than 31% of your take home income. This is very important to make sure you are not over extended. If this number is close to 25%, then I would be much more comfortable for you.
There you have the steps to rebound after your foreclosure. It is not the end of the world and definitely something you can bounce back from if you are willing to put in the hard work it will take to re-establish yourself. - Buying A House After Foreclosure
This step by step guide seems very helpful. There are many homeowners who faced and are facing foreclosure at this time. It is important for them not to be depressed. Instead, they should plan on how to recover from their previous failure.