Loans after a Foreclosure

Let’s make this clear from the get-go. If you want to get a loan after a foreclosure, you probably won’t get a fantastic rate. It’s a shame, especially if the foreclosure was caused by factors beyond your control, but it’s a reality you should be ready to face.

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However, this doesn’t mean that it will be impossible to get a fair deal. Here are just a few simple rules you should follow to improve your chances of finding a loan that offers a reasonable rate.

Wait A While

First, wait until at least two years after the foreclosure before applying. It may seem like a long time, but lenders will tend to look much more kindly on you after a couple of years than if you stroll in a month after a foreclosure asking for money. Besides, mortgage lenders, as a general rule - look very closely only at the last three years of a borrower’s credit history. If you’ve behaved yourself for two years they’ll accept that you’re no longer too much of a credit risk, and as a result they’ll be much more inclined to offer you a fair interest rate.

Make A Down Payment

If you can manage it, make a large down payment. Even a person with perfect credit will get a better rate if they pay down a lump sum up front. It’s no different for a borrower with a foreclosure in their past. In fact, it will make you look even more responsible if you’ve saved for a down payment.

Be Responsible

Remember those two years I told you to wait after your foreclosure? Well, here’s how you can pass the time: pay your bills. Every one of them, in full and on time. The best way to prove to a lender that you can be a responsible borrower is by maintaining a spotless credit record after your foreclosure.

If you can follow these simple rules you should be able to find yourself a loan deal that you can live with and one whose interest rate and repayment schedule doesn’t send you plummeting back toward financial problems. Good luck!