How to Find a Mortgage After Foreclosure

It is possible to get a loan for a mortgage after you have had a home go into foreclosure. Unfortunately it may take a few years after your foreclosure, and the criteria needed to qualify for a new mortgage will be stricter for you. If you want to find a mortgage after foreclosure, take the following steps into consideration.


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    Write a formal statement for the reason you went into foreclosure. If you feel that the foreclosure was out of your control, make a note of the circumstances that led you to that decision. This would be considered an extenuating circumstance. Some lenders consider certain extenuating circumstances in the borrower's favor--for example, an illness, death or loss of job.
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    Understand that it may take time before you are able to get another mortgage. You are considered a high risk for lenders, and in most cases, they are not allowed to sell a mortgage to someone who just foreclosed on a home. Therefore, take this time to get your financial situation back on track and reestablish yourself. With good financial effort, you could possible qualify for a loan within a couple of years.
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    Build your credit by paying your bills on time. This should be your main objective after foreclosure. You can set up electronic reminders to pay your bills, or you can arrange for your bank to make automatic payments. Just make sure you have enough funds in your bank to make the payments. As your credit score rises, lenders see this as a sign of responsibility, and they will be more inclined to sell you a loan.
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    Save for a down-payment. You will need to put money down when you apply for a mortgage following foreclosure, so establish a fund now. With every paycheck you should put aside an amount that goes toward the down payment. Save as much as you can because the down payment on your mortgage will likely be high. If you are looking for an estimate, contact a mortgage lender and ask an expert for an estimate based on your circumstances and the value of a home you would be interested in. Although the actual purchase would not be made for a while, this will offer you a good starting off point. You can keep checking the rates and expectations as you get closer to being able to purchase a home.
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    Expect to pay a high rate of interest. Lenders consider mortgage loans after foreclosure to be very high risk. However, if you pay your payments on time and your credit continues to grow, then you will begin to look more responsible to lenders. If this is the case, you can look into refinancing your high interest rate for a lower one when you have reestablished yourself.

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Categories: Mortgages and Loans