Back when home foreclosures on the Central Coast were truly rare, people who had just gone through one had little knowledge of what the ultimate repercussions would be. Although home foreclosures are still to be avoided if at all possible, the circumstances that created many recent ones are often understandable. Just about everyone in and out of the banking and real estate industries has seen otherwise responsible individuals fall victim to outside economic conditions.
Understandable though individual home foreclosures may be, future lenders will still follow hard and fast guidelines. If home foreclosures – on the Central Coast or elsewhere -- are in your recent past, putting yourself back on the right track to home ownership will take close attention to the credit-building basics you may not have had to think about for years:
· Bide your time. While it’s not necessary for home foreclosures to disappear from your report to qualify for a new loan, it can take seven to ten years for missed payments to fall off your credit report.
· Spend the next two to three years diligently demonstrating wise spending habits. Not taking on large amounts of debt while making on-time payments improves your credit score even as you strengthen your financial position. Play it safe, too: since missing payments sets the credit clock back to zero, don’t risk waiting until the last minute to make payments.
· Focus on paying off any collection accounts in full. Although paying a collection account does not necessarily boost your credit score, mortgage lenders still see any unpaid debt as a strong negative. Since you will be required to settle those accounts before closing a new loan anyway, so it’s beneficial to address outstanding debts early.
The American Dream of home ownership need not be permanently lost due to home foreclosures. With planning and patience, anyone can rebuild their finances. Then as now, I’m here to help answer questions at any stage of buying or selling Central Coast real estate.