Many people have been led to believe that once they go through a foreclosure that they are never going to be able to buy a home again. In some cases, they are told that buying a home after a foreclosure is possible, but they will have to have an insane amount of money down, that they will have an incredibly high interest rate and that it will take years to get it. This could not be further from the truth. The fact of the matter is that you will have to take some crucial steps, but you can learn how to buy a home after a foreclosure.
One of the first things you are going to want to do is to get your finances in order. Most likely, if you were behind on your mortgage, you were behind on other bills as well. It is time to do whatever you have to do to get those expenses on track. Pay off whatever debts you can, even if they are small ones.
Get Some Credit
You will need to remember that your credit score is going to be damaged. If you do not have any credit cards, you need one. It might seem like this is the opposite of what you want, but you need some sort of line of credit that you can make timely payments on in order to rebuild your credit score. This is what you will want to work on when learning how to buy a home after a foreclosure.
If you suffered through a foreclosure due to a situation completely outside of your control, such as the death of a spouse, a layoff or an illness, you will want to note this on your credit report. Making such a note does not change your credit score, but it does give future creditors a change to understand your situation before making a decision on your credit application.
Pay Now and Refinance Later
Now, even once you have built your credit score up some, you are going to face a slightly higher interest rate. Just go ahead and accept that now because there is nothing that you are going to be able to do about it at this point. However, do not worry about it being so high that you cannot afford to buy a house.
You may have to downsize the type of house purchase. Once you start making house payments on time, your credit score will jump up even faster and you have plenty of time in the future to refinance for a lower interest rate.
As you can see, buying a home after a foreclosure is possible. It might take a couple of extra steps, but every step is well worth it.