After the application of a home loan, you will receive two documents, a loan estimate, and closing disclosure. On the surface, these documents are identical but they both serve slightly different purposes. Up Next: Expenses To Expect In The First Year Of Homeownership Here is what you need to know about the differences between these […]
A Guide to Applying for a Mortgage After a Foreclosure
Your previous home was foreclosed, perhaps because you couldn’t afford your payments due to a death in the family or serious illness. What can you do to ingratiate yourself with the mortgage company to get a mortgage on a new home? It won’t be easy, but you can make the process smoother by following these tips:
Time it Right
When you foreclose on your home, you will often have a waiting period of three to five years, depending on the type of loan you had. A waiting period is to ensure that you were able to get back on your feet and save up money to afford to pay for a new mortgage.
If the foreclosure was caused by an event beyond your control, like a serious illness, then you may be able to qualify for a mortgage sooner. However, you must provide proof that the event was serious enough to cause the foreclosure.
Pay off Your Credit Card Debt
Before you can think of applying for another mortgage in KC, it’s a good idea to pay off your credit card debt. In doing so, you will be improving your credit score, and reducing your overall debt. Just make sure that you don’t close any accounts or consolidate how much you owe on one card. Closing an account reduces your credit availability and putting all your debt on one card can hurt your credit score.
When you get pre-approved for a mortgage in KC, you have shown that you have a lender supporting you and know how much you can afford to pay on a property. Lenders don’t want to show people homes for sale and then find out that they cannot afford them. Doing so is considered a waste of time for all parties involved. Get pre-approved and talk to your real estate agent before you go looking at homes.
Don’t Apply for Other Loans
If you want to apply for a mortgage in KC after a foreclosure, hold off on applying for a loan for a car or other big purchase. Doing so will lower your chance of getting a mortgage in KC because lenders will see that you have other debts to pay off and be wary that you’ll be unable to pay your monthly mortgage payments.