Last week, I spoke about buying a home after bankruptcy. Your wait time depends on the type of bankruptcy filed as well as your current creditworthiness. For St George Home Buyers, foreclosures take a little more time to overcome than a bankruptcy. With a little bit of planning, you’ll be a homeowner before you know it.
St George Home Buyers and Foreclosures
While foreclosures used to hover like a dark cloud over someone’s credit, that stigma no longer holds true. Millions of people lost their homes to foreclosure when the economy took a downturn in the late 2000’s. After the passing of time, these buyers are coming back into the marketplace. Lenders still take caution when dealing with St George home buyers that experienced a previous foreclosure. However, it may not take as much time as you thought to become a homeowner again.
How Long Do I Have to Wait?
Foreclosures stay on your credit for seven years. Even so, you may be eligible for a home loan again after as little as three years. Of course, that is dependent upon several other factors such as your credit history since the foreclosure and the money you’ve managed to save up.
What Do I Need to Do Before I Buy Another St George Home?
If you’re interested in purchasing a St George home after foreclosure, you’ve already made a smart choice by doing some research now. Three years sounds like a long time, but it can go quickly. The timer starts after the foreclosure is complete. If you want to own a home again, you need to start getting your ducks in a row as soon as possible.
Money, Money, Money – St George home buyers who have already been through a foreclosure present a serious credit risk, as you can imagine. More likely than not, the foreclosure process took any money you had already saved up. So, mortgage companies want to see the effort you’re making to right yourself again. Expect to pay around 10% for your down payment. Some lenders may request less. For example, FHA loans require as little as 3.5% down. But 10% shows a financial stability that banks find attractive in St George home buyers. And you also qualify as a first-time home buyer as long as you haven’t owned any property in the last three years, including investment properties.
Credit Score – Start whipping your credit score into shape as soon as you can. Pay down as much debt as possible. Aim for keeping your revolving credit accounts at no more than 50% of your limit. Better yet, get them under 25% and your credit score will jump up tremendously. Don’t open any new accounts. Not only do you get dinged for a credit inquiry, but it also takes time to “season” an account as far your credit score is concerned. Older accounts in good standing provide more positive weight towards your credit score than new accounts do. Never, ever be late for any payment, including utilities, as these count against you on your credit score. Finally, pay off any past due or collection accounts as soon as you can. The more distance between those payoffs and your application for a new home loan, the better.
Once you’ve gotten your financial situation in order, you’re ready to become one of the thousands of St George home buyers. Aquire pre-approval from your bank before you start looking. That helps keep you focused on homes you know you qualify for and shows sellers that you’re a serious buyer. Always let your St George REALTOR@ know about your previous foreclosure as well as the steps you’ve taken since then to improve your finances. The more they know, the better service they can provide. Good luck and happy house hunting!