Foreclosure Victims Can Try Again

By  | 

Those who lost their homes during the Great Recession may be eligible to buy again.

"Conforming loans have a time frame of seven years where you basically can't get a conforming loan during that period of time if you've gone through a foreclosure," said Bill MacLeod, the President at Coldwell Banker Hubbell Briarwood.

But you may qualify for the Federal Housing Administration loan in a shorter amount of time, three years after a foreclosure.

"A convention loan would be like 20 percent down, and it's a typical loan," said MacLeod. "FHA is special financing."

And you need a good enough credit score to qualify.

"Banks and institutions are looking at credit like they've never looked at it before," said MacLeod.

"To qualify for an FHA loan, you want to have a credit score of at least 640 with 3.5 percent down payment," said Stacy Schlicher, a loan officer at Union Home Mortgage. "Youl'l also want to have some money in a savings account or IRA for reserve funds. That's money that you have after your downpayment, left over in case of emergencies."

The better your credit score, the better your interest rate.

"When you want to purchase a home after a foreclosure, as long as the waiting period has passed and you've established credit and show you can repay a loan, there isn't really much of a difference between financing someone who has never had a foreclosure," said Schlicher.

And there are steps you can take to raise your credit score.

"One of these organizations like the center for financial help or lender can help you do is look at your credit report and see if there's mistakes, are there errors that are reporting in some way which hurts your credit worthiness," said Mitch Crank with Century 21 Looking Glass Real Estate.