Buying a Home After Foreclosure: Get Prepared

What do you need to get together in order to buy another home after a foreclosure?

Those who have completed short sales and that were among the foreclosure victims should now be getting back to the point where they can qualify for mortgages for buying a home again.

There is still a window of opportunity to take advantage of low home prices and low mortgage rates but it will not last forever. So what do you need to do to get prepared for buying a home again?

1. Credit

Start by taking a look at your credit report. If anything inaccurate is showing up, dispute it. This can include old foreclosures which should have dropped off, late payments or charge offs which should show satisfied and balances. It is also smartest to talk to a mortgage pro to analyze where you can make the biggest impact in improving your credit score before taking action.

2. Debt Ratios

A part of your credit score and any mortgage application today is your debt-to-income ratio. Keep this down by refusing to take on extra debt, paying down credit cards and installment loans.

3. Paper Trail

This is where most would be buyers fall short and sabotage themselves and their efforts of buying a new home. Do not underestimate this. Failure to keep a solid paper trail can put you back years. This is especially true when it comes to paying rent. So many went off the grid after losing their homes early on in the crisis and paid cash for everything. Sorry, but those hand written rent receipts from your landlord are not going to cut it.

4. Taxes

No one loves taxes or paying more of them but especially for self-employed home buyers it is critical to have taxes filed and not to be trying to hide too much from the IRS or your reported income will not support your mortgage application.