There is no doubt that a foreclosure affects your credit score, but according to Jeannie Bolger, Senior Loan Officer with Nova Home Loans, it all depends on your situation.
“After a foreclosure, your credit score will definitely go down between 100 and 200 points on the credit FICO score,” said Bolger. “But it’s a tough question because everyone’s situation is so different and it depends on past payment history, mortgage late payments and debt.”
But Bolger also said the waiting period after a foreclosure for an FHA loan is 3 years, for a VA loan it is 2 years, and a conventional loan is 4 years. Although this seems like a long time, it is a perfect time to re-establish your credit and make yourself more desirable for a loan.
And if you did foreclose on your home, Bolger believes there are some important tips you need to follow.
“Do not overbuy and really know what your budget is,” she said. “Have an emergency fund to allow for ‘unexpected’ emergencies and have a savings account to make mortgage payments if you lose employment or get sick.” Have your credit run 6 months after the Foreclosure by a mortgage professional so you will be better prepared to meet the minimum FICO score requirements required by the loan terms.
If you or someone you know foreclosed on a home, there are options available to ensure homeownership again. The US Department of Housing and Urban Development offers tips about foreclosure and information about the process.
If you would like more information on what it takes to buy a home again after foreclosure, give me a call today at 602-456-9388 and I can find you the perfect home in the valley!