Having their home foreclosed on leaves many Tennesseans feeling downhearted and pessimistic. However, just because someone goes through a foreclosure does not mean that his or her financial future is ruined or that they will never be able to buy another home.
The biggest concern for any potential purchases going forward is one’s credit score. According to Fox News, contrary to what many people think, the lower a person’s credit score is before a foreclosure the easier it will be for his or her score to bounce back. Therefore, continuing to use credit but doing so responsibly will be the key to getting a credit score to where it was pre-foreclosure. This means keeping credit accounts open and making payments on time. Regular credit score monitoring will allow people to see how their credit score is being rebuilt over time.
When it comes to applying for a new mortgage, patience is necessary but will payoff down the line. According to the Wall Street Journal, foreclosures can take a number of years to recover from. In order to apply for some conventional mortgages, there is a seven year waiting period following a foreclosure. Therefore it is best to wait to until the foreclosure no longer appears on a credit report to apply for a mortgage.
It may also be best to avoid applying for other types of loans if obtaining a new mortgage is a goal. Financing for other big purchases such as furniture or cars can reflect negatively on a borrower when applying for a mortgage.