After foreclosure: How long until you can buy again?
Financing a home after foreclosure is possible for most homeowners. Those who default on their mortgages due to economic hardships, such as job loss, may receive approval for another mortgage in as little as two years, while it may take more than seven years for strategic defaulters to be approved.
MAKING SENSE OF THE STORY FOR CONSUMERS
- Lenders utilize several methods in determining whether to grant mortgages, including the amount of money borrowers have saved; employment histories; and payment history.
- According to the chief economist with the Mortgage Bankers Association, lenders may be more willing to finance a mortgage for a borrower who defaulted on their mortgage as a result of factors beyond their control.
- Some homeowners who strategically default—intentionally not meet their mortgage obligations although they have the financial means to do so—assume they can raise their FICO scores by paying their others bills on time. However, most future loan underwriters will scrutinize their records very closely, and if they determine the borrower strategically defaulted on their previous mortgage, the repaired credit score will not overshadow the walkaway.
- Although not impossible for strategic defaulters to finance another home purchase, it likely will be more difficult. Lenders may ask for down payments of 30 percent or more to provide sufficient collateral to enable the bank to recoup most of its money in a foreclosure. These borrowers also may be charged higher interest rates, even above the levels other borrowers with similar credit scores would receive.
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This is good news, read about how California Foreclosure Activity Falls in April . Monthly foreclosure activity in California fell by the largest percentage seen so far this year in April, down 25 percent from the previous month to 69,725 properties with foreclosure filings. This latest state total also represents a nearly 28 percent year-over-year decrease in foreclosure filings from April 2009, according to the latest RealtyTrac® U.S. Foreclosure Market Report. “Foreclosure activity in California has decreased 36 percent from its peak back in July 2009, and is substantially down from a year ago,” said James J. Saccacio, chief executive officer of RealtyTrac. “The number of default and auction notices both documented significant declines in April....Read more
Here is some good information to know, The Top 10 Myths About Buying a Foreclosure by Tara-Nicholle Nelson. Trulia.com and RealtyTrac recently surveyed U.S. adults to get some insight into what people *think* is involved with buying a foreclosure. Here are the Top 10 Myths that came up, and the facts to set the record straight: Foreclosures need a huge amount of work. 92 percent of consumers expressed that if they bought a foreclosure, they would be willing to make home improvements after they closed the deal, with 65 percent being willing to invest 20 percent or less of the purchase price. Although stories of foreclosures missing plumbing and every electrical fixture are very memorable, many foreclosed homes need only the cosmetic improvements. Read More