With a foreclosure on your credit report, getting a mortgage is going to take you at least 3 years from the time you lost your home to be eligible for a mortgage again. The time in between your foreclosure and the 3 year point is critical for qualifying for a mortgage again. Use this time wisely and getting a mortgage will be much easier.
Do not wait until the very last moment to improve your credit history and credit scores. Recovering from a foreclosure takes time and at least 3 years. Only extenuating circumstances like the death or a spouse, or a serious medical condition where one of the spouses in the family can no longer work can you get consideration for a shorter time period. Divorce is not considered a good reason to get a shorter time to getting a mortgage following a foreclosure. If you have had a foreclosure you'll have to wait it out - there is just no way around it.
FHA Mortgage Programs Are Your Only Option At 3 Years From Foreclosure
- If you wait for three years you will be able to try to qualify for an FHA or a VA mortgage. Make sure that during this time you do not miss any credit payments as this will drastically hurt your scores. Missing payments will also indicate to an underwriter that you may be more of a credit risk than they have a taste for and they might not approve your mortgage.
Last 12 Months Of Credit History Most Critical To Mortgage Qualifications
- Make sure that you are very careful the last 12 months prior to your 3 year point to keep your credit clean and don’t get too much credit out on credit cards. Too much credit may indicate that you do not know how to manage your credit and debt which could keep you from qualifying.
- If you are at least three years from your foreclosure and you have had problems within the past 12 months on your credit history, then you will have wait until you have at least 12 months of good credit history to have a shot of qualifying. Fannie Mae and Freddie Mac Mortgages After A Foreclosure
- Fannie Mae and Freddie Mac require 5 years to pass from a foreclosure before you can qualify for a regular conventional mortgage. With the current underwriting guidelines from most lenders – you will need at least credit scores of 620 to have a shot at qualifying.
Fannie Mae and Freddie Mac, as of August 2008, are charging some pretty high fees to borrowers with credit scores less than 740 and for those scores especially who are less than 680. With this being the case your best bet for a mortgage might be an FHA mortgage. Make sure that you check with an FHA approved lender to see what makes most sense.
Clean Up Your Credit Report To Raise Your Credit Scores
During the time in between your foreclosure and getting a new mortgage you should be paying close attention to your credit history, credit report and credit scores. By the end of the third year you will want the highest scores that you can get.
Review the following articles to learn more about the factors that impact your credit scores:
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