Purchasing a new home after a recent or past foreclosure is easier than you may think. Some previous homeowners are hesitant to apply for a mortgage. Considering their history, many assume that mortgage lenders will immediately deny their loan request. On the contrary, numerous lenders offer mortgages and loans to individuals with damaged credit. Hence, obtaining a new home loan is within your reach.
Ways to Quickly Improve Credit Score
After a foreclosure, rebuilding credit is a top concern. Obtaining a mortgage loan and maintaining consistent payments will significantly improve your score within a year. Even if you cannot negotiate a low interest rate immediately following a foreclosure, by consistently making on-time payments and proving your credit worthiness, you have the option of refinancing in a couple of years for a low rate mortgage.
If you are hoping to obtain an initial low rate mortgage, make an effort to improve your credit rating before applying for a home loan. Applying for new credit accounts is a fast way to raise your credit score. If possible, obtain a secured/unsecured credit card, department store card, etc. For the next 12 months, make regular timely payments. Paying off the balance each month proves you can handle credit responsibly. When re-establishing credit, periodically check your credit score and report for inaccuracies.
Picking the Right Lender
The lender chosen to finance your new home loan is important. When searching for a mortgage lender, many homebuyers do not shop around. Moreover, many do not consider secondary money sources such as mortgage brokers or sub prime lenders.
If you have a past foreclosure or bad credit, you will not receive good rates with traditional mortgage lenders. These lenders prefer prime candidates. If your credit score is low, the likelihood of the loan defaulting is high. Thus, bad credit applicants are charged excessive fees and interest.
After a past foreclosure, contact an online mortgage broker. Brokers are eager to help you acquire the best loan package. Moreover, the process is very simple and quick. After submitting your income, employer, and credit information to a mortgage broker, the broker will find appropriate loan programs, and provide quotes from a variety of lenders. Upon careful examination of quotes, you may either pick a lender or refuse the offers.