As the housing market continues to recover and many Americans find themselves back in the position to consider buying a home, it’s important to know the details about buying a house after you’ve had the bank foreclose on your property. Are you thinking about becoming an Illinois homeowner, either for the first time or after a foreclosure? A recent article in the Chicago Tribune ran a story about what it takes to buy a home after foreclosure. Is it only about credit scores and down payments? Or is there more to the equation? These questions are popping up across the country, and their answers will be important for Illinois families who are beginning to think about owning a home—again.
If you’re concerned about what it takes to buy a property after foreclosure, it’s important to speak to an experienced real estate attorney. The lawyers at the Emerson Law Firm have been helping homeowners and potential homeowners for years, and they can speak to you today.
The Importance of Your Credit Score and Credit Report
In the Chicago Tribune article, a local couple wrote into the newspaper, telling “Real Estate Matters” about their homeownership history. In short, the couple had lost a home to foreclosure, and now they’re hoping to be eligible to buy again one day in the future. So what do Illinois homeowners like this couple mentioned in the Chicago Tribune need to know about buying a home after they’ve lost a property to foreclosure?
First, credit histories and credit scores are going to be important. Since your credit score follows you into a marriage, if you’re currently thinking about buying a property with a spouse or significant other, it will be essential to know what each of your credit histories and credit scores will look like to your lender. In terms of the key number, the Chicago Tribune’s “Real Estate Matters” says credit scores at 750 or above are ideal for homeownership: “we’d like to see your score in the mid- to upper 700s as you consider buying a home.” Why? According to the article, “you’ll have an easier time obtaining a mortgage loan and will obtain a better rate.” In other words, “in the long run, you’ll save quite a bit of money if you are able to get the best rate possible having a higher credit score.” The key takeaway when it comes to credit scores and credit reports is this: higher scores result in better rates, which save you money.
It’s a good idea to obtain a copy of your credit report, ensuring that you don’t have any “potentially negative information” that a lender will see. If you do see negative information, you’ll want to make sure it’s accurate. If it’s not, you can dispute the information with the credit reporting agency. However, if the information is accurate, it can lead to high interest rates and, in some cases, the inability to obtain a home loan.
Why You’ll Need a Down Payment
More than your credit score, you’ll want to make sure you have a significant down payment if you want to buy a home. In some cases, potential homeowners may qualify for special home loans through the U.S. Department of Housing and Urban Development (HUD). If that’s the case, you might not need a lot of cash for your down payment. However, if you’re trying to prove to a lender that you’re a serious homebuyer, you’ll want to be able to show that you really understand what it takes to buy a home and make monthly mortgage payments.
In most cases, if you’ve lost a property to foreclosure, you’ll need to work to improve your credit score, and you’ll also want to make sure you have a large cash down payment before you think about entering into another mortgage agreement. The dedicated attorneys at the Emerson Law Firm have specialized knowledge about the foreclosure process and the real estate market in Illinois. Contact us today.
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