In order to obtain a mortgage from the average bank, you need to have a job, show the money available for the down payment, closing costs and reserve fund to make future payments. You also need to have a good credit rating, with proof that you pay your bills in a timely manner, do not owe too much and have a good payment history.

 

After you go into foreclosure and regardless how good you look the whole picture changes. Currently, the rules state that you may not obtain another mortgage until after five years have elapsed from the date the foreclosure was completed- discharged. This may also be seven years in some cases. In addition:

 

·        The mortgage must be for a primary resident

·        Minimum of 680 FICO score is required

·        Must have 10% downpayment

·        May refinance, but no cash out allowed

 

These are the guidelines as they existed over the past few years. As we enter a new era of foreclosures and mortgage lending, these rules will change. So, although you believe there is no alternative other than foreclosures now, know that you are affecting your future. Can’t worry about it now? Well, you can only hope they relax these guidelines for those that fell victim to catastrophic circumstances beyond their control.

 

What to do:

 

·        Keep all documentation pertaining to the foreclosure and sale

·        Make sure the sale date is listed correctly on your credit report

·        Reestablish and maintain good overall credit history

·        Make sure you can prove a housing payment after the foreclosure, such as paying rent

 

The key is to show you have the ability to make a housing payment in a timely and responsible manner. I believe that all lenders will require this proof in order to issue another mortgage. Therefore, make sure you pay rent to someone by check or money order and keep copies. Even if you live with family, pay something.

 

 

Dale Siegel