Since the housing crash credit conditions have tightened, and anyone who went through foreclosure might well think they have no chance of ever owning a home again. However an article in aol.com points out that this needn’t be the case and there’s quite a lot that can be done to help improve your homeownership prospects.
Not surprisingly having a low credit score is a real worry, as after foreclosure it’s likely to drop between 100 and 300 points. This is pretty dramatic, but the foreclosure only stays on your credit report for seven years, and during that time there are a lot of different things that can be done to help improve the score. In fact this will be one thing you’ll want to focus a lot of attention on. It might be tempting to turn to companies who offer to boost your credit score for you, but this isn’t necessarily needed. Simply making sure you pay your bills on time will help to gradually raise your score. If you do miss a payment it is worth noting that this will affect your credit score, but seven years should be long enough to make sure you’re better prepared for owning a home in the future.
As well as paying bills before their due date it’s wise to pay off any outstanding and past-due bills. Another thing that is important to pay attention to is the utilization rate, as it should be 10% or less. If you are able to open new lines of credit then this will help to show lenders that you can manage money responsibly and that you’ve learned from the past.
Anyone who has been through a foreclosure will be anxious to make sure it doesn’t happen again, and there are various measures you can take to help protect yourself against this possibility. One thing to do is to make sure you don’t buy a house you cannot really afford. It is important to do this even if you are offered more than you should be borrowing.
Work out exactly how much you can afford and make sure you don’t exceed this limit. It’s also important to take into account will be additional expenses associated with owning a home such as maintenance and repairs, insurance and property tax. If you can try to save up a bit of money for an emergency fund that can cover you if you experience some life-changing event and which will allow you a bit of breathing space to get back on your feet.