Although it is sometimes difficult to do so, it is possible for a person who has been through foreclosure to buy a house after the foreclosure is behind him or her. A person who wants to buy a home after foreclosure should consider the reasons that led to the foreclosure before, whether it was from misconduct by the mortgage lender or a financial problem. Reviewing these reasons may help avoid foreclosure in the future.

Once a person goes through foreclosure, it is noted on his or her credit report. If there were missed payments before foreclosure, these will be noted on the credit report, as well. These notations may affect a person’s credit score and ability to get approved for another mortgage loan. A person buying a home after foreclosure is likely to be offered higher interest rates for loans than a person who has not, but this also depends on a person’s credit score.

Typically, homeowners also have to wait a certain number of years before applying for a loan to buy a home. If applying for a federal housing administration (FHA) loan, a three-year wait from the time the foreclosure is completed is required. Some lenders can overlook this waiting period, but this is likely to come with steep interest rates on the loan and other unfavorable terms. Military servicemen and others whose foreclosed loans were government-backed loans may have to satisfy other requirements before they are approved for other government-backed loans.

It is critical for a person seeking a mortgage loan to look into various lenders and research the terms they offer, especially to former homeowners who lost their homes to foreclosure. Shopping around for the best terms can help save money in the long run. In addition to considering the financial terms offered by a prospective lender, the person seeking the loan should investigate the loan modification options available to borrowers.

The lender may need to be convinced that a person who has previously gone through foreclosure will not default on payments as before. This can be done in various ways, including remaining current on all other bills. Saving a down payment to purchase the home will also help convince the lender that you are likely to keep up with the payments.

A person who lost a home through foreclosure should ensure that he or she does not lie about the foreclosure or try to hide it on loan application documents. A lender who does its due diligence in checking the financial status of the prospective borrower will almost always catch misrepresentation by a borrower, and it will mean that the lender does not approve the loan.

Contact an Experienced Attorney

If you are going through a financial hardship and are facing foreclosure, you need to contact an experienced attorney as soon as possible. For more information and to find out if you have a valid defense to foreclosure on your home, call us at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan. Our experienced attorneys can guide you through possible defenses and different alternatives to avoid foreclosure. Additionally, we can advise you if filing for and bankruptcy is in your best interest.

(image courtesy of Valentine Locatelli)

1. Rising Rates

Last December, the Federal Reserve raised interest rates for only the second time since 2006 and many economists anticipate at least 2-3 more rate hikes this year. Rate hikes will cause mortgage rates to rise, potentially making it more difficult for prospective homebuyers to be able to afford the home of their dreams. (Rates have, in fact, already started creeping up.) But Redfin Corp. Chief Economist Nela Richardson says don’t worry too much about this trend. “We expect mortgage interest rates to increase, but to no higher than 4.3 percent on the 30-year fixed rate.” That’s still a great deal compared to historical norms.

2. More Credit

Richardson points out that although rates may rise, mortgage credit will likely be more widely available due to slightly looser lending standards. She notes that the Federal Housing Administration will likely lower fees it charges first-time homebuyers, a continuation of a trend begun in the Obama administration, under which it lowered fees in 2015.

In addition, starting in 2017, government-owned mortgage companies Fannie Mae and Freddie Mac will begin backing larger mortgages for the first time in more than 10 years, making it easier for buyers in expensive markets to finance their purchases.

3. More New Homes

Despite the most recent data on new home construction showing builders pulled back on new projects at the end of 2016, the overall trend in home construction is clearly positive, with the average annual rate of new groundbreakings reaching more than 1.17 million in 2016, up about 5 percent from 1.108 million in 2015. Economists expect this to continue in 2017, as home builders are encouraged by higher wages, looser credit and increased demand from buyers.

4. Medium-sized Cities on the Rise

One of the dominant stories of the current economic recovery is that top-tier economic cities like New York, Seattle, and San Francisco have seen property values rise as workers flock to these locations to take advantage of high-paying jobs.

Younger folks are finding themselves attracted to medium-sized cities, as well as cities like Detroit that are going through a development renaissance. Expect the trend to continue in 2017.

5. Foreign Buyers Aren’t Going Away

One trend that is helping drive prices beyond the realm of affordability in places like New York and Los Angeles is an influx of foreign buyers of U.S. real estate. “U.S. and Europe continue to attract growing amounts of foreign capital, especially from Asian investors,” writes Scott Brown, global head of real estate at Barings Real Estate Advisers.

This has only increased of late, fueled in particular by buyers from China who are looking for safe places to store their wealth, away from the slowing economy of the homeland, where repressive financial policies make it difficult to earn decent returns on savings.