| If you have been through foreclosure and intend to | | | | enough for it. |
| buy a house again, wait till you improve your credit and | | | | 3. Save for PMI: You should have enough savings to |
| financial situation. This is because you would not get a | | | | pay for PMI (Private Mortgage Insurance) upfront as |
| mortgage till you re-establish your credit and get | | | | well as in the form of monthly premiums till you build up |
| financially stronger. | | | | 20% equity in your home. The PMI is required in case |
| When can you get mortgage again | | | | your down payment is less than 20% of the home |
| If you are looking for an FHA loan, you will have to | | | | purchase price. |
| wait for 2-3 years after the foreclosure sale. In these | | | | 4. Cash reserves: Your escrow account should have |
| 2-3 years, you will have to improve your credit and | | | | excess cash reserve to compensate for late |
| show that you have been regular in paying all your bills. | | | | payments. It is better to accumulate cash reserves for |
| However, if you would like to apply for mortgage from | | | | about 6 months of mortgage payment. Retirement |
| a Fannie Mae lender, then you will have to wait for at | | | | assets such as IRA and 401(k) money can be |
| least 4-5 years after foreclosure sale. However, in | | | | considered as cash reserves, but are valued at only |
| case of foreclosure due to circumstances beyond | | | | 70% of the cash amount available from these |
| your control, you need to wait for 3 years in order to | | | | accounts. |
| get Fannie Mae mortgage after foreclosure. | | | | 5. Avoid credit card debt: Do not apply for new credit |
| 6 steps to help you qualify for mortgage | | | | cards when you are on your way to organizing your |
| If you would like to get mortgage after foreclosure, | | | | finances and credit. Just take out a secured credit |
| check out the 6 steps given below. | | | | card and use it for small purchases every month. |
| 1. Boost up your credit score: You will have to bring up | | | | Make sure that you pay off the card within the due |
| your credit score to minimum 580 to qualify for FHA | | | | date. A secured card helps rebuild your credit history. |
| loan. Conventional mortgage lenders require a score of | | | | So, while you apply for one, make sure that the |
| 680-700 especially in times of mortgage market crisis. | | | | creditor reports to all the 3 major credit bureaus. |
| Check your credit report for any dues on credit cards | | | | 6. Prepare a budget: List your income and expenses, |
| or loans and try to pay off high interest debts first. | | | | bills, debts and develop a budget so that you can |
| Negotiate with the creditors to get a reduced rate of | | | | follow it and avoid overspending. It will help you save a |
| interest. Do not close your old accounts within a short | | | | certain amount towards your down payment or |
| time as it will raise the debt-to-credit limit ratio and thus | | | | escrow cash reserve. |
| affect your score negatively. | | | | Getting a mortgage after foreclosure is possible only if |
| 2. Cash for Down payment: FHA lenders would require | | | | you stick to a planned budget, try to save dollars and |
| you to pay down 3.5% of the home purchase price. | | | | take steps to rebuild your credit. The fact is, you will |
| But, conventional mortgage lenders would insist on a | | | | have to give yourself some time before you actually |
| 10-20% down payment. So, you will have to save | | | | gear up for a mortgage again. |