Foreclosure can make it seem impossible to ever buy a house again. The impact of the process can be devastating, long-lasting, and touch your life in a variety of negative ways. While you may believe you are destined to be a renter for the rest of your life, foreclosure doesn’t have to mean that buying your own home is no longer possible. With time and patience, along with perseverance, you can make buying your own home a reality again. By educating yourself as fully as possible about credit and real estate, you’re far more likely to be successful. Read on to discover how to buy a house after going through a foreclosure in North Carolina and start living the dream of homeownership again.
Get Your Credit Report
Your credit report must be improved during the period you are forced to wait to qualify for a mortgage, so that you may buy a house after going through a foreclosure in North Carolina. One of the first steps you should take is to ensure that the information being reported is correct and rectify any data that is in error. Another way to improve your score is to make timely payments without fail, this can have a great impact on the overall numbers as well. Additionally, you will want to make a concerted effort to pay down the balances on your remaining debts. Doing so will improve your debt to income ratio, which is the percentage of your income used to pay your monthly debts.
Save Your Cash
Because your credit has been so adversely affected, the more you save towards buying a house after going through a foreclosure in North Carolina the better. You may be required to put down more than the standard minimum because of your credit history. You’ll also want to have additional cash on hand to make any repairs or complete work, which often comes along with more affordable housing. If you haven’t yet, make plans to sit down and get serious about working out your budget and sticking to it without fail. Add into your budget saving from three to six months of your income as emergency living expenses. You may just be in for a shock to learn how much is being spent on small expenditures, such as special coffees or eating lunch out of the office every day. Dedicating yourself to your budget in every area of your life in very small ways can make huge differences over the long term and help you in your quest to buy a house.
Improve Your Credit Score
Once you have gone through the process of foreclosure, it will remain on your credit history for seven years. Additionally, there is at least a two year period for VA loans, and at minimum, three years before you would be able to qualify for mortgages from other lenders. You will want to work swiftly, taking any actions within your power during this time to repair your credit score in any way possible. When you do buy a house after going through a foreclosure in North Carolina, you can expect to pay higher interest on the mortgage as well. For this reason, it may be beneficial to buy a property that is at a bargain price and invest some elbow grease equity into your new home.
Extenuating Circumstances
Regrettably, circumstances in life can bring on changes that are unpredictable and are beyond our control and we are usually forced to live with the consequences. Should the cause of your foreclosure fall under this category, this fact can shorten the waiting period needed for you to qualify for a mortgage. To do so without any waiting period, your situation must meet the guidelines your lender considers as qualifying for the extenuating circumstances exclusion. Likewise, you must be able to show that you have fully recovered financially from the event and that the event is unlikely to occur again should you buy a house in the future.
Professional Buyers
It’s never a bad idea to have an experienced guide, especially when you’ve done all of the work or repairing your credit and making sacrifices to save, in order to achieve homeownership again. Professional buyers can help you find a house at a discount. Considering the impact of a foreclosure on your credit, the lower the mortgage, the more savings over the long term. You can rely on the network of industry professionals that have been built over time with the best in the business. These professionals work to fulfill your goals and suit your needs, from the initial inspection through closing. Because of such networking, professional buyers have the inside scoop on the best deals in North Carolina.
Going through a foreclosure can be a difficult and stressful experience, but it doesn’t necessarily mean you can’t buy a house in the future.
Here are some steps you can take to increase your chances of buying a house after going through a foreclosure:
- Rebuild your credit: One of the biggest factors in qualifying for a mortgage is your credit score. After a foreclosure, it’s important to focus on rebuilding your credit by paying all bills on time, reducing your debt, and avoiding opening new credit accounts.
- Save for a down payment: Lenders will typically require a down payment of at least 3% to 20% of the home’s purchase price, depending on the type of loan you are applying for. Start saving for a down payment as soon as possible.
- Work with a reputable lender: Look for a lender who specializes in working with borrowers who have experienced a foreclosure. They can help you understand your options and guide you through the application process.
- Get pre-approved for a mortgage: Before you start house hunting, get pre-approved for a mortgage. This will give you an idea of how much house you can afford and help you narrow your search.
- Consider a government-backed loan: Some government-backed loans, such as FHA loans, may be more forgiving of a foreclosure than conventional loans. Talk to your lender about your options.
- Be patient: It may take some time before you can qualify for a mortgage after a foreclosure. Don’t rush into buying a house before you’re financially ready.
Remember, buying a house after a foreclosure may be more challenging, but it’s not impossible. With patience, hard work, and the help of a reputable lender, you can become a homeowner again.
Why not let a professional buyer, like those at Tarheel Home Buyers, guide you step by step through the process needed to buy a house? Tarheel Home Buyers makes it easy to buy a house and save money after going through a foreclosure. Ready to learn more about how to buy a house after foreclosure in North Carolina? Reach out to Tarheel Home Buyers at (984) 206-3532 today!