How can I recover from a foreclosure?

After a foreclosure you may think that your chances of ever owning a home again are slim to none. However, this isn’t always the case; there are quite a few things you can do to bounce back from a foreclosure, from credit repair to establishing a solid work history. U.S. News & World Report offers some insight on the steps you can take when seeking a new mortgage after a foreclosure.

Keep Up on Bill Payment

In order to reestablish your credit rating, you’ll need to make sure that you’re making all bill payments on time. Paying bills on time also shows that you’re in a better place financially, which will assuage a lender’s fears about you defaulting on a new mortgage. If you’re applying for a Federal Housing Administration (FHA) loan, you’ll need a credit score of at least 580 (conventional loans typically require credit scores of 620).

Give Yourself Enough Time

You should also be aware that it will take quite a bit of time to be approved for a new mortgage post-foreclosure. When applying for an FHA you might only have to wait a year to be approved. However, the timeline for conventional loans is much longer, sometimes lasting up to seven years. You can show that you were the victim of extenuating circumstances (such as a death in the family), which might make it possible to be approved in as little as three years.

Be Prepared to Provide Documentation

When it comes to filling out the application, lenders like to see a lot of supplemental information. For instance, you’ll probably need to provide previous years’ tax returns, proof of income, bank statements, and any other information that can establish your current financial status. The type of documents you need may vary quite a bit depending on your lender, so be sure to get clarification before moving forward.

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