If you’ve ever dealt with mortgage debt you know just how stressful being at risk of foreclosure can be. Luckily, there are ways to avoid foreclosure, but not everyone is so lucky. While getting a new mortgage after a foreclosure isn’t impossible, it certainly is challenging. In fact, your better solution may be in bankruptcy, which can make getting a new mortgage very possible.
The truth about bankruptcy often surprises people when they learn that so much about future credit and loans depends more on their actions after bankruptcy than before filing. The best way to get started is by working on rewriting your credit history now that your past, negative debt histories have been resolved.
Many people think they should immediately jump back into the credit scene, when they should actually be taking time to clean up their report. Start by obtaining a copy of your credit report and thoroughly review it for accuracy. Be sure your accounts are up to date with your debt discharge and do not contain old payment information.
Also, start slow. Rebuilding your credit takes time and going into a new mortgage application before you have built up your current credit history can leave you denied for a loan. Begin with a small, unsecured line of credit that you can use to establish a positive payment history. Keep your debt balances manageable and be consistent in payments for at least six months before moving into multiple unsecured, or a single secured, lines of credit. Take at least one year to rebuild your credit before applying for a loan.
Finally, save money for a down payment. Many lenders take down payments seriously, as they can be a sign of a serious borrower. You can’t expect a lender to take a chance on you, if you can’t even save enough money for a down payment. The more money you can put down, the better your chances at getting a good mortgage loan.