8 Secrets to Buying a Home Out of State, Without the Risk of Remorse

HOW TO BUY A
HOUSE AFTER
FORECLOSURE
Losing your house to foreclosure is one of the worst feelings in the world. You
worked hard to save up and purchase the home, and this is where you planned to
raise your family and create memories – yet it only took one event (loss of
employment, divorce, illness) to flip your financial life upside down and put your
mortgage payment out of reach.
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you lost your home after a job loss or another
If
hardship, getting back on your feet can
financial
the desire to own again. But even if you’re
ignite
better financially and you can afford to
doing
again, a foreclosure in your recent past
purchase
put the brakes on any mortgage application.
will
foreclosure isn’t a minor ding on your credit
A
It’s a major derogatory item that can take
report.
of points off your credit score. Plus, a
hundreds
remains on your credit report for up to
foreclosure
years. You’re a risky borrower, and lenders
seven
going to take any chances. You have to wait
aren’t
least three years before you can qualify for an
at
mortgage and seven years before you can
FHA
for most conventional loans. Some
qualify
lenders will reduce the wait period
mortgage
on the circumstances surrounding the
depending
and the size of your down payment,
foreclosure
there are no guarantees. Speak with a
but
lender to discuss your options or to see
mortgage
credit score will drop significantly after a
Your
And the higher your credit score
foreclosure.
the foreclosure, the more points you’ll lose.
before
bad credit is fixable. So if you’re
Fortunately,
about buying again in the next few years,
thinking
the time to start preparing your credit score.
now’s
you have other bills, continue to pay these on
If
or improve your existing payment history.
time
isn’t the time to fall behind on credit cards,
Now
loans, and student loans. Positive credit
auto
is more important than ever. If you don’t
activity
other credit, contact banks and compare
have
credit cards. You’ll need a security
secured
to get one of these cards, but secured
deposit
are much easier to qualify for with bad
cards
Just make sure the issuing bank reports
credit.
activity to the credit bureaus on a monthly
your
A good payment history helps increase your
basis.
Ask Your Landlord to Report Rent
3.
Payments
renters don’t realize how timely rent
Some
can build or rebuild their credit
payments
The problem, however, is that
history.
landlords don’t report rent payments
many
the credit bureaus. A renter can make
to
payments every month for years,
on-time
his credit report never reflects this
yet
history. Since renting is the only
positive
after foreclosure, ideally you’ll want
option
rent from a landlord that reports
to
to Experian RentBureau. If a
payments
doesn’t currently report, there’s
landlord
option of enrolling in a rent payment
the
that partners with Experian. The
service
will collect and send your rent
service
to your landlord, and as a bonus,
payments
can opt to have your rental payment
you
reported to Experian RentBureau.
history
down payment mortgages are making
Low
easier for buyers to qualify for mortgage
it
An FHA mortgage only requires a
loans.
down payment and a conventional
3.5%
requires a 5% down payment
mortgage
first-time homebuyers with
(although
credit scores may qualify with only
higher
3% down payment). Unfortunately, a
a
in your recent past ruins your
foreclosure
of getting a low-down payment
chances
This doesn’t mean you need the
loan.
20% down payment, but you
traditional
need to bring more cash to the table.
will
addition to closing costs, which can
In
as much as 5% of the mortgage
costs
most mortgage lenders will
balance,
a minimum 10% down. If you’re
require
a $200,000 house, that’s $20,000
buying
a down payment plus up to $10,000 in
for
costs.
closing
1. Wait Three to Seven Years
4. Increase Your Savings Account
if you can qualify sooner.
2. Reestablish Your Credit
FICO score.