Assessing Your Options After Foreclosure

Is there really a future for homeowners after foreclosure? Most homeowners who find themselves in this kind of rut think it is nearly impossible to get another mortgage after foreclosure. The good news is that there is life after foreclosure. You must start working on your credit score by paying your bills and making sure that your account payable is current. With the proper management of your finances, it is possible for you get back on track in as little as 2 to 3 years. However, you have to understand that the actual number of years will largely depend on several variables, and these include your income, debts and other variables that are reflected in your credit report.

The degree of difficulty in getting mortgage financing after foreclosure is relative, and what is important is that you begin work as soon as possible so that positive steps and corrective measures are implemented to get your credit standing in positive territory. There are several things that you have to prioritize so that you can increase your chances of getting your mortgage application approved.

Improve your Credit Score

Obtain copies of your and your spouse’s credit report from the 3 credit bureaus. You are entitled to receive a free report from each of the 3 credit bureaus under 2 conditions. By law, you can obtain a free copy of your credit report once a year. You are also entitled to receive a copy of your credit report if your mortgage application has been turned down by your bank or mortgage company.

As soon as you receive your credit report, carefully review the information and items, and verify if there are discrepancies or erroneous data. In case you find them, make the necessary request for correction with the concerned credit bureau. Once you are done with the corrections, start working on those items in your credit report that are marked “late.” These are the items that need your urgent action. Pay them as soon as possible, and ensure that you keep all your other accounts current.

The next thing that you must focus on is your remaining credit card debt. Banks and mortgage companies consider the ratio that compares the credit amount that is currently available to the amount of credit that you have actually used in order to evaluate how responsible you are in managing your finances. It would not look good to your bank or mortgage company if all variables in your credit profile are almost in their higher limits. It would definitely be good if the amount you owe is just a small percentage of your credit limit. Although banks and mortgage companies will not reveal their threshold amount, it is still essential that you consistently keep the level of your credit as low as possible, preferably below 50% of your credit limit.

Managing your Credit Card

Closing your credit card accounts has its pros and cons. Before you make any decision, it is essential that you consider these important points about your credit card accounts.

If you are going to close your credit card accounts, you are in effect lowering your credit line, and this will have a negating impact on the ratio that compares the credit amount used to the amount of available credit. On the other hand, too much available credit also has its downside. Some banks may construe this condition as an opportunity for you to eventually use this available credit in the future, which will result to higher monthly payments for your credit card accounts. Thus, you may have to consider adjusting your credit card payments to their desired threshold level in order for you to establish the exact amount of mortgage payment that you can afford.

By: real estate info

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