It’s an undeniable truth that foreclosure takes a hit on your credit score. After a foreclosure, you can expect to see your credit score drop a minimum of 100 points, but the actual amount will depend on what it was before foreclosure. As your credit score drops, so does the likelihood that you’ll get approved for any kind of loan. This fact is especially concerning for Floridians, where foreclosures are well above the national average. How then will someone whose home was foreclosed on be able to buy a home in the future? We’re here to tell you there’s hope, as well as provide some important advice for rebuilding your credit after foreclosure.
Give it time
When it comes to rebuilding credit, patience is key. Nobody’s credit score can be repaired over night. While it’s hard to pinpoint exactly how much waiting you’ll need to do before applying for another mortgage, there are some general guidelines. For instance, if you’re looking to obtain a conventional mortgage loan that isn’t insured by the federal government, you’ll have to wait seven years after your foreclosure. The only way around this waiting period is if you can prove that extenuating circumstances were to blame for the foreclosure, and even then it’s rare that lenders will approve a mortgage loan.
A better alternative is to try to procure a loan from the federal government. FHA loans typically have a waiting period of three years, unless of course you can prove that the foreclosure was the result of a job loss. In the latter case, you’ll only need to wait a year to apply. For those who qualify, loans insured by the U.S. Department of Veterans Affairs can be obtained after two years.
Project financial stability
One of the most important things you can do to rebuild your credit is paying your bills in a timely manner. This is essential for demonstrating to lenders that you’re financially responsible, in spite of your setback. Additionally, you’ll want to make sure you’re not adding to the credit card debt you already have. Cut back on credit card spending, but leave unused cards open. Doing so shows that even though you have credit card funds at your disposal, you are in control of your spending. As you practice this behavior, your credit will slowly show improvement.
The key to rebuilding credit after a foreclosure is time and managing money effectively. It can be hard to see the light at the end of the tunnel when your home is being foreclosed on, but with the help of a skilled Miami foreclosure attorney, you’ll get there. Contact Graham Legal today to learn how we’ll guide you through every step of the foreclosure process.