Did you know that a foreclosure record on your credit report stays there for seven years? A foreclosure is a devasting event thousands of people experience each year, but will it stop you from getting a mortgage in the future? This question is one that many people wonder about, and you might too if you've gone through foreclosure. Keep reading this guide to learn more about the effects of foreclosure on getting a mortgage.
Understand mortgage guidelines
The first thing to understand is that mortgage lenders follow guidelines when evaluating loan applications. They set these in place for several reasons. First, they have guidelines to ensure that they only approve loans for people who can repay the loans. They look at a person's financial picture, credit, and income to determine if they appear to be creditworthy. Secondly, they have standards to avoid discrimination when processing loan applications. They use the same criteria for every applicant. Finally, they use standards because loan programs require them.
Learn why lenders consider a person's foreclosure history
The application you fill out for a mortgage loan asks if you ever had a foreclosure. But why do lenders want to know this information? They want to know because a foreclosure poses risks. If a person went through a foreclosure once, it might happen to them again. Therefore, lenders use caution when proceeding with loan applications from people who had foreclosures.
Steps to take to get a mortgage after foreclosure
The bad news is that your lender might reject your application if you had a foreclosure. The good news is that you can take steps to avoid getting rejected. First, you must wait a specific length of time before applying. You can ask your lender about the timeframe rules, as they vary by loan program.
Secondly, you can take steps to increase your credit score. After all, you can increase your credit score with the right actions, such as paying your bills on time and avoiding new debt.
Contact a mortgage lender to learn more about your options
As you see in this guide, foreclosure affects your ability to get a mortgage loan. However, it doesn't stop you from getting one permanently. Instead, you'll need to wait a certain amount of time and work on building your credit, as these steps will help you qualify for a loan. You can contact a mortgage lending service—such as Clift Enterprises Clift Mortgage—to learn more about your options with loans.
When you start thinking more seriously about how to manage your finances, it is worth saying how important it is to find the perfect loan. While the right loan could help you to pay down debt without worrying a lot about the repercussions, the fact of the matter is that some people don't research loans as extensively as they should, causing problems. The purpose of this blog is to find great loans that could help you along the way. Check out these posts that talk about everything from narrowing down loans to identifying ways to identify lower interest rates. Check out this information to make sure you have what you need.