How Does A Previous Foreclosure Affect Your Ability To Buy Another House?

Your history with regards to repaying loans makes up a big part of your credit history and affects whether or not future and possibly larger loans will be approved.

Having a foreclosure on your credit history is by far the worst event that can happen to your score.

Many people believe that once they have a foreclosure on their credit rating they will never be able to own a home again. This is not the case; all it takes is re-building your credit rating and employing good financial habits.

It may not be right away that you will be able to purchase a new home, since foreclosure stays on your credit history for 7 to 10 years - but in time it will be possible.

Build Your Credit History

Your FICO score will be affected by your foreclosure and this will be the case for up to ten years. Over this period it is likely that any application will be met with rejection.

In this time period, you should establish new credit by using pre-paid credit cards that are paid off monthly. Pay all bills when they are due and you can also use store credit cards. Once your credit has been rebuilt and time has gone by, financial institutions may be able to assess you as being less of a risk.

Don't Be In A Rush

Don't rush into trying to buy a new home immediately after a foreclosure. It can be possible to purchase a home this early if you have the funds available, or are able to secure a sub-par lender - but it also means you probably won't receive a great deal on your mortgage.

These lenders can charge up to 6% more than the current average interest rate and they may also charge you additional fees.

Compare Mortgage Lenders

If you decide to try to purchase a home right after foreclosure, make sure you compare the lenders that are willing to work with you. Most sub-par and high interest lenders will offer very high interest rates and fees.

Get several quotes before making your final decision. Be careful of dodgy operators - checking their credentials with the Better Business Bureau is recommended.

About the Author:
Jared Wright is the marketing manager of Clivir.com - the free learning community site. You can learn more about foreclosures such as foreclosure refinancing help and deed-in-lieu of foreclosure by clicking the links.

Article Originally Published On: http://www.articlesnatch.com

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, deed-in-lieu of foreclosure

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