Buying A Home Post Foreclosure

Buying A Home Post Foreclosure


home ownership

If you recently lost your home to foreclosure, how long do you think it’ll take before you can become a homeowner again? 5 years? 7 years? Maybe even 10 years?

Many consumers believe that once they have lost a home to foreclosure, they won’t have the opportunity to purchase another home for many years. Thinking that their credit is trashed and that a foreclosure will be on their credit report for 7 or 10 years, perhaps longer, some people are under the impression that homeownership is off limits.

True, a foreclosure will be on your credit record for beyond the seven year period that most bankruptcies are listed. Yet, having a history of a foreclosure doesn’t have to stop you from buying another home. Moreover, you could find yourself in another home a few months post foreclosure.

Most conventional lenders will not consider lending you money for a home quickly, for the simple reason that if you lost a home recently, then you could lose your home again. But there are factors which might be taken into consideration by the lender:

  • You lost the home due to divorce, an illness, loss of job, or some other valid reason.
  • You have the cash on hand to put at least 20% down on the home you want to purchase.
  • You are willing to pay a higher interest rate, perhaps as much as 2% over the current rate offered to their best borrowers. Along with the bigger down payment and possibly including some points, a lender may decide that you are a risk worth taking.

Loans and loan rates are always determined based on risk factors. If a lender believes that you are worth the risk and you can put down a large amount of cash, then you could be considered for a loan.

Granted, you’ll pay tens of thousands of dollars more interest payments with a higher risk loan, but you can always refinance later especially as your credit improves and a lower rate is offered to you.

Home ownership post foreclosure isn’t a given, but it isn’t impossible either. You must demonstrate to a lender that you are worth the risk and hope that they can see past the problems which caused you to lose your home in the first place.


Bank Home Equity Program

Credit Management Center

Home Equity Calculators


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About Author

Matthew C. Keegan

Matt Keegan is a freelance writer and editor as well as publisher of "Matt's Musings", his personal blog. Matt covers campus, consumer, business and financial topics on various websites and blogs, and has been published in the "Houston Chronicle", "Sam's Club Magazine" and "Wisconsin Golfer".