Many people believe that buying a home after a foreclosure is an impossibility. Those of you who think this way are quite mistaken. You may also think that you will not be able to qualify for a car loan or a credit card too. Again, you would be mistaken. A home foreclosure stays on your credit record for seven years but that does not mean that you can’t begin to repair your credit soon after the foreclosure.
You will experience the most damaging effects of the home foreclosure on your credit report immediately at the time of the foreclosure. Actually, the process of moving from becoming delinquent on your mortgage loan, to filing for foreclosure, to a sheriff sale and eviction, your FICO score can go from 650 to the high 400s. Once you are removed in time from the foreclosure, you can begin to slowly claw your way back to financial health.
At first you would probably begin to pay off any additional debts that you have. Then you can get a secured credit card and pay off your balance each month to show that you are responsible with your borrowing. Taking a look at your three major credit reports and disputing derogatory or inaccurate information can also begin to raise your credit score in spite of the foreclosure.
Raising your credit score by creating an on time payment history can put you in the market again for buying a home after a foreclosure in a relatively short period of time. If you can get back to have an excellent credit score in two or three years it is possible to become eligible for a competitive loan rate if you have also saved enough for a 15-20% down payment. Without a sizable down payment, you may have to wait four to five years before buying a home after a foreclosure. The point of providing you this information is to let you know not all is lost after suffering a home foreclosure. I personally know someone who lost all their assets, including their own home and much investment property through bankruptcy and subsequent foreclosures, and within four years they owned their own home again. Sure, they suffered a terrible financial and emotional blow, but they eventually recovered and so can you.