After Foreclosure, 3 Steps to Getting Back on the Road to Buying
Finding your dream home is truly a special and momentous occasion, but sometimes the honeymoon doesn't last. Just as money is the root of many divorces, it is also the root of many foreclosures. But once the long and tedious process is finalized, how do you get back in the game and find a new match?
Waiting and Reflecting.
While it can take as long as seven years (three years under extenuating circumstances and FHA loans, and 2 years for VA loans) to buy again after foreclosure, at least you'll be prepared and know 110 percent what you're getting yourself into. Use the long waiting period to reflect on what went wrong and to prepare yourself -- financially and emotionally -- for the bigger and better options that you'll eventually have down the road. Don't get discouraged; good things come to those who wait.
Get your credit back in shape.
While going through a foreclosure will have a negative impact on your credit, there are some ways that you can strengthen your credit score and make it "fit" again. Paying off debt, re-establishing credit, cutting the fat on unnecessary expenses and building your savings are all great routines to add the muscle back into your score. Living within a budget and spending your money more wisely also will allow you to move forward with confidence and a better understanding of how much home you can afford when the time comes to buy again.
Honesty and Communication
Learn from your mistakes. Be open and honest with yourself and know what you want and what you can afford. If the luxury downtown penthouse was what got you into trouble in the first place, then why not "restart off" with a more subtle place in the suburbs and have something to look forward to in the future? Remember, communication is key. When reapplying for a mortgage, discuss what happened with your lender and, most importantly, explain what you did to resolve it. While it's never fun to rehash painful parts of your past, it's very much necessary and will help you in your decision-making process. Don't make the same mistake twice.
See more on Zillow:
Boomerang Buyers: Buying Again After Foreclosure or Short Sale
Building Your Real Estate Dream Team
How to Make Sure 'the One' Doesn't Get Away