can i get a mortgage loan with a recent foreclosure on my credit(3 months ago) and a lower credit score-about 500-550?

Asked by Brian Hussey, 55447 Thu Jul 14, 2011

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Engebretson…, Agent, Wayzata, MN
Wed Dec 19, 2012
Its probably not what you want to hear, but I would highly suggest in your waiting period working to improve your credit score. There are free credit services out there that will help you understand your credit reports and give advice how to improve your number. The higher your score, the better rate you will eventually receive. Lower rates equal real money when you eventually get your next mortgage. The most important components are that you pay your bills on time and that you do not have any additional unpaid debts. Good luck to you!
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Peter Boyle, , Minneapolis, MN
Thu Jul 14, 2011
The earliest you would be eligible for a standard FHA loan is 3 years and conventional is longer than that. I am not aware of any bank that would do your deal now. Perhaps a Hard Money solution could work but the price you pay to do that kind of loan is more costly than renting for three years and building up a strong credit package in my opinion.

One option could be to find a seller willing to sell on a Contract for Deed with a 3.5-4 year balloon so you can have the benefits of homeownership but delay the financing until you are eligible.

Peter Boyle
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..., , Lexington, MA
Thu Jul 14, 2011
Not knowing anything else your required down payment would be closer to 50% and you would pay a high interest rate. You may be better off waiting and focusing on bringing your credit score higher.
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Brian Hussey, , 55447
Thu Jul 14, 2011
What if I had a 20 percent downpayment and a purchase price in the 190,000-220,000
range with income around 100,000?
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I have a new program now for 10% down, and you just have to purchase in the twin cities. I actually will have a property coming on the market in Mound that would fit this price range perfectly! You could close by the beginning of the year Brian just get in contact with me ok? Thanks!
Flag Thu Dec 20, 2012
Christopher…, Agent, Bloomington, MN
Thu Jul 14, 2011
The answer is pretty much NO,

As someone that does short sales I have searched pretty far to find lenders for my clients to no avail. It is 3 years right now just to get FHA financing after a foreclosure. You would have been in somewhat better shape if you had done a short sale but not much. You will have to go the seller financing route or a rent option like Steele said.

I personally would go the seller financing route if possible and if you got the DP needed. If you want any help just contact me directly. I know how tough it is with a foreclosure Brian and wish you the best of luck!

***and of course I am not a lender so please don't take my word for it. If there is financing available (besides seller financing which is usually the case) I sure would like to see it!****
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Matt Jahr, , Sartell, MN
Thu Jul 14, 2011
Steele is right. I have heard of smaller lenders making loans to people with credit issues, but you need to have very strong compensating factors like 40% down, and 20% DTI.
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Steele V. Pr…, , Minneapolis, MN
Thu Jul 14, 2011
It will be tough with the foreclosure that short a time ago. However, one thing to look into would be owner financing and/or rent with option to buy.

Would be happy to assist if you need help.

Steele V. Propp
Foreclosure Specialist
Home Avenue Real Estate
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