Debt

GLOSSARY:

• Foreclosure
• Short sale
• Credit history
• Deed-in-lieu of payment

More Terms

RELATED LINKS:

• Is it possible to get another mortgage once you’ve lost a home to foreclosure?
• Homeowners facing foreclosure have a new ally
• Will Obama’s foreclosure prevention plan hold my mortgage payments to 31% or less of my gross income?
• Is there a way to avoid foreclosure by selling my house to a friend and buying it back?
• 11 state programs can help you avoid foreclosure

Q. I want to purchase another home, and my credit score is 750. But we had a foreclosure 18 months ago. Is there anything we can do?

A. Lenders are understandably cautious about giving mortgages to borrowers with recent foreclosures.

Most banks and mortgage companies won't approve a new loan until four years have passed and your credit reports show a consistent effort to keep up with all of your other bills during that time.

You can shorten the wait by qualifying for a federal program in which the government guarantees the lender will be repaid if you default again.

If you're a veteran or are currently serving in the military, your best bet is a VA loan. The Department of Veterans Affairs allows you to obtain a new mortgage only two years after a foreclosure.

The next best bet is an FHA loan. The Federal Housing Administration will consider helping you only three years after a foreclosure.