Do These Things IMMEDIATELY After If You Ever Want To Buy A House Again After A Foreclosure
A foreclosure is a hard thing for anybody to face, however, it shouldn't be allowed to slow down your financial wellbeing forever. While having a foreclosure on your credit report will affect your score and your eligibility for different loan products, if you follow these tips, you'll be able to get back on your feet faster.
In general, you'll have to wait at least three years to get another mortgage through the FHA home loan program, but other home loan programs will make you wait significantly longer. If you want to apply for a car or other type of loan, you'll have to wait until your credit bounces back a bit (generally 12 months of positive payment history will do) before anyone is willing to approve you.
Ways To Speed Up The Process
Want to get back on your financial feet a bit faster? Luckily, there are some things you can do to speed up the process. Number one, figure out your finances right away. You have just taken a big hit to your credit, so go ahead and look at all of your accounts now.
Are credit cards ruining your financial wellbeing? Close store cards and higher interest cards and instead focusing on using low interest/reward cards wisely. Start by paying down balances and coming up with a plan to eventually get to the point where you aren't carrying a balance at all, and instead are paying your statement in full.
You should also look at other loan products you may have and figure out a payment plan to ensure you are able to pay things on time going forward. Call up companies who you are behind on payments with and ask for them to work with you. In most cases, they will be very happy to do so if you're serious about getting caught up.
Rebuild Your Credit ASAP
When some people go through financial turmoil that leads to a foreclosure, they end up cutting themselves off from credit all together. No more cards, no more loans, they just go silent. This may be good for your spending habits, but unfortunately, it's only hurting your credit.
The quickest way to bounce back from a poor credit event like a foreclosure is to continue using credit cards and showing positive payment history. This helps rebuild your score while burying negatives, like the foreclosure, in a bunch of positive history. You don't have to spend much, just a couple dollars on each card that you pay off in full.
This lowers your credit utilization, shows on-time payments, and shows that you're using your credit responsibly.
Keep Track Of All Your Paperwork
When you go through the foreclosure process, it's really important that you keep copies of all the documents you get showing when it happened. Sometimes, errors occur and it may stick to your credit report for longer than it's supposed to, or the date may be reported wrong.
By having these papers on hand, you can show any future lenders exactly when the foreclosure happened.
Nonprime Lenders. Worth A Shot?
Subprime lenders can help you sometimes get back on your feet with a car or personal loan, but you need to be especially careful when dealing with them. Realize that they are going to charge you an extremely high interest rate and lots of fees for any financial product you take from them, whether it's a loan or a credit card.
If you're looking to rebuild your credit, get $200 together and open a Discover Secured Card or a similar secured card from a well-known banking institution. In 9-12 months (given you pay on time), they will send your money back, un-secure your credit card, and give you a higher limit, then you'll officially be back on the road to credit health!
Meet With A Mortgage Advisor
A mortgage advisor can discuss your options with you and tell you about what needs to happen in order for you to qualify for another mortgage. They can advise you on your finances too, like lowering your debt-to-income ratio and raising your credit score.
Our team of loan experts at Horizon Lending Services are equipped to help you with any of your mortgage questions and needs. Contact us today!