For those consumers who have a foreclosure on their record, it may feel like they will never repair their credit enough to become a homeowner again. It can happen, but it will depend on a variety of variables.

“Bouncing back after a foreclosure will depend greatly on your individual circumstances, as well as the mortgage interest rate you are willing to pay.” Foreclosures can remain on your credit record for seven to 10 years. Most lenders will consider your request for a home loan two to four years after your foreclosure, although your interest rates will be higher.

“Keep an eye out for predatory lenders that will issue a home mortgage in less time than average, but will charge you obscenely high mortgage interest rates, fees, and penalties.”

A quality lender will expect you to show that you have cleaned up your credit. In this light, a borrower who has worked hard to reestablish good credit may also be shown some leniency by the lender.  

Repairing your credit is possible, although it can be a slow-moving process. Act as quickly as you can to take care of any outstanding delinquencies, tackling a little at a time until you get back on the right track. “Make an effort, if at all possible, to repay your debt in full and on time for six months to a year to prove you are working hard to repair any damage.”

“It will also be helpful to provide a reasonable explanation about the circumstances that led to the foreclosure, such as exuberant medical expenses or lifestyle changes beyond your control.” If you declared bankruptcy because you were laid off from your job, the lender may be more sympathetic. If, however, you went through bankruptcy because you overextended personal credit lines and lived beyond your means, it is unlikely the lender will readily give you a break.

If you’ve waited several years after your foreclosure and you’re still having trouble obtaining a traditional mortgage, consider other options, such as subprime mortgages, which are made to borrowers who do not meet traditional credit criteria at a higher interest rate.  

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