It is common knowledge that a foreclosure can be damaging to one’s future in lending. While a foreclosure itself isn’t going to keep you out of the realm of borrowing in the future, it can be a more challenging experience. Knowing what to expect at your next mortgage application after a foreclosure can help you prepare and get the best deal.
Expect The Unexpected
The first thing to know about applying for a mortgage after a foreclosure is that no two lenders will view this situation the same. There are vast differences in the ways lenders view applicants, especially those with bad credit or negative lending histories. You may be denied one or more times, or told you can only secure a loan with unfavorable loan terms. Therefore, it is important to know what you have going for you and play up your positive features.
In most cases, you will be expected to wait a year or more before applying for a new mortgage after a foreclosure. While this may seem like a bad thing, it actually is helpful in that it gives you a chance to rebuild your credit and save up for the transaction. When applying for a mortgage after foreclosure you should (a) have as much saved as possible for a down payment, at least 10 or more percent, (b) taken the time and steps necessary to boost your credit score and (c) shop around for the best loan, looking for the lowest fixed interest rate possible.