January
3
January 3rd, 2013
by
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Foreclosure usually begins after the borrower has missed three consecutive mortgage payments. Then, the lender will record a notice of default against the property and unless the debt is satisfied, the lender will foreclose on the mortgage and proceed to set up a trustee sale, where the property is sold to the highest bidder.
"Foreclosure is one of homeowners' biggest fears," says Michael Litzner, Broker of Century 21 American Homes. "Not only have they lost their home, but they worry they may never be able to buy again."
However, if your property has been foreclosed on, it is possible you can buy again--but a lot will depend on your circumstances and the mortgage interest rate you are willing to pay.
"Generally, most lenders will consider your request for a home loan two to four years after your foreclosure," says Litzner. The past two years are what most lenders focus most heavily on, and foreclosure can lower your credit score by anywhere from 200 to 300 points for the first two years afterward. So in terms of credit, the longer you wait, the better.
"Check with a few local lenders, as laws are different in each state, and predatory lenders will issue a home mortgage in less time." But beware, Litzner cautions, as they routinely charge high mortgage interest rates, fees, and penalties for this privilege.
A quality lender will expect you to show that you have cleaned up your credit, so spend a few years after your foreclosure really trying to improve your rating. Providing a reasonable explanation about the circumstances that led to the foreclosure – such as exorbitant medical expenses, job loss, or the like – is also helpful.
While improving your credit, try and save as much money as possible for a future downpayment, as lenders often require a significantly larger downpayment-sometimes 30 percent or more-for those who have a previous foreclosure on their record.
For more information on buying after a foreclosure, please contact Century 21 American Homes at MLitzner@C21AmHomes.com, 1-800-270-6318, or Century 21 American Homes.
Century 21 American Homes is one of the fastest growing real estate brokerages serving Long Island, Queens and Brooklyn. To find out more about an exciting career in real estate contact us at careers@c21amhomes.com.
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Tags: Get a mortgage after foreclosure, mortgage financing - after foreclosure