Contrary to what you might have heard, buying a home after a foreclosure is possible.� However, homebuyers should not apply for a mortgage without doing their homework first. Since the forclosure is damaging to your credit, many lenders are likely to take advantage of you. Of course, your options are limited. Nevertheless, this does not mean you have to accept any offer given to you, no matter how terrible.

- Bad Credit OK
- New Purchase, Home Equity & Refinance
- Get up to 4 offers
- Short Application

Why Foreclosures Occur?

When a homeowner has a mortgage they are unable to repay it will eventually get foreclosed.� Mortgage payments generally have to be at least three months behind before a lender begins the foreclosure process. If the homeowner is able to acquire funds and begins to pay the monthly payments, the lender will stop foreclosure.

Factors That Contribute to Foreclosure

Of course, there are many factors that can contribute to a homeowner’s inability to repay a mortgage loan. For starters, if the homeowner is living beyond one’s means this will make it harder to maintain the regular monthly payments.� Secondly, many people fall in love with a home they simply cannot afford. In this case,they have a monthly income that is really below what they should have for their particular home. Many homeowners do not take into consideration all of the other expenses associated with owning ahome, i.e., utilities, yard upkeep, and maintinance.� Often times these other expenses will lead to excessive credit card debt and consequently less income left over to pay that mortgage payment.

Some Negatives of Buying a Home after Foreclosure.

In general, most lenders will not approve a mortgage loan immediately following a bankruptcy.� In their mind, you are a high risk applicant. This stands to reason–if you were not able to make regular payments on your last mortgage, they figure that the odds of your defaulting in the future are probably high.� Lenders do, however, understand that circumstances change for the better.� For example, if the foreclosure was due to a loss of employment or illness, you may be in a better position to qualify for the mortgage after six months.� Still, there are negatives of buying a home soon after foreclosure.

High Mortgage Rates

The interest rate following a foreclosure can be outrageous.� As a homebuyer with a recent foreclosure, you are considered high risk. Therefore, most traditional mortgage companies will not approve your loan.� The companies that do will often charge you interest rates of 3 or 4 percentage points above traditional rates.� This will often increase mortgage payments by a few hundred dollars.

Things to Remember when Purchasing a Home after Foreclosure

Remember to be patient when looking to buy a home relativley shortly after a foreclosure, rebuilding your credit is key. During the first 24 months, attempt to open new credit accounts and maintain regular payments.� Be sure to pay all creditors on time and avoid missing any payments.� Take your time and shop around for a new mortgage. Prior to accepting the mortgage offer, be sure and contact many lenders for quotes. If you shop online, you will be able to obtain many quotes from several lenders in minutes.