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Losing your home to foreclosure was probably one of the most devastating experiences in your life. Home ownership is such a luxury - mainly because you have the satisfaction of knowing that your hard earned dollars are going towards something that you can call your own, rather than fattening the wallets of a landlord and living under his rules.
Most folks who have went through foreclosure would love the opportunity to be homeowners once again, and the fact of the matter is - its entirely possible. Albeit it will take some work to accomplish, you can own another home after foreclosure.
Learn Everything You Can About Credit
Your most powerful tool when you decide to work toward homeownership again is knowledge. You must become very knowledgeable of the credit reporting industry and how your credit score is calculated. By knowing how potential lenders view you as a borrower based on your credit score, you can be proactive in your quest to rebuild your borrowing reputation to the level that will make you into an acceptable risk.
Your credit score is based on the FICO scale, which ranges from 300 to 850. At the top section of the scale lies the homeowner - anywhere from 680 on up. From there on down, you have those who are stuck renting. Getting to the top of the scale can best be accomplished by some smooth maneuvering and well-planned tactics.
What Do Lenders Look For?
Lenders want to know that you can manage credit that is extended to you, and most importantly that you will pay in a timely fashion on the debt that you owe. That is why your credit report lists whether or not you pay as agreed, and whether or not you pay on time. Lenders also want to see that you can manage different types of credit - so you must open diverse accounts with different institutions. Lenders do not like to see multiple inquiries into your credit that happen when you apply for tons of loans or credit cards - which makes it important that you are selective in the accounts that you apply for.
Your Game Plan For Homeownership
Knowing this, you can now begin to incur the type of debt that stands out to lenders. First of all, open up two to three secured credit card accounts that are secured by a deposit to the credit card issuer. Aim for these accounts to be between $300 and $1000 in terms of the amount of credit available. Use each card wisely, and never spend over 50% of your available credit each month. In turn, pay off everything you owe on each card except for 30% of the total balance. This is the most expedient way to improve your credit score, and it works every time.
At the same time, take out a secured personal loan. You can use your vehicle as collateral to secure a personal loan for at least $1,000. Plan to pay off your secured personal loan with twelve monthly payments. Upon doing so, you will qualify, in most cases, for an unsecured version of the personal loan with the same lender. Take out this loan in a slightly higher amount, again paying it off in twelve monthly installments. This is a method that never fails to add tons of points to your score.
Within two to three years of faithful payments, you will qualify to purchase another home at a great rate. You can find reduced rates of interest for home mortgage loans for those who have been foreclosed on before by visiting an online lender. Online lenders also have higher approval rates for all credit types.
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