If you’ve lost your home to foreclosure, you may think you’ll never have another opportunity to be a home owner, to claim that special piece of the American dream. Don’t give up hope, though. It will be possible to buy another home in the future if you plan carefully and work to lay the foundation.
Be Patient
Getting ready to buy another home takes time. In some cases, if you happen to have a hefty down payment and are willing to pay a high interest rate, you may be able to obtain financing within a few months, however, this is not generally the best solution. Getting a home loan with bad credit can be very expensive. That extra interest adds up and could cost you many thousands of dollars over the life of the loan. It is more sensible to take a year or two and build up your credit rating. Since the foreclosure will remain on your credit report for several years, you may still have to pay a little higher rate, but not as high as you will if you try to buy too soon.
Use the time to reestablish your credit. Get a secured credit card, use it sparingly and pay it off in full each month. Make sure you pay all bills on time. You’ll be surprised how quickly you can boost your credit rating.
Consider a Lease with an Option to Buy
While the housing market is still sluggish and many home owners are having trouble selling their houses, a number of sellers are offering their homes for lease with an option to buy. This is true of Eden Prairie homes as well and often results in a win-win situation for both buyers and sellers.
If you find a home you would like to buy but are not in a position to get financing at the moment, taking a lease with an option allows you to live in the home you want to own and gain the time you need to qualify for a conventional mortgage in a couple of years. Often, at least part of the rent you pay will be applied towards your down payment.
The seller, too, benefits from this arrangement. He will have a tenant who has a real interest in maintaining the property and making his payments on time. If, at the end of the lease, the buyer fails to get financing or decides to walk away from the property, the seller is allowed to keep the option money the buyer has paid. It can be a satisfying plan for everyone involved, but it is strongly advised that you proceed with caution when you are considering a lease with option situation. Have an attorney go over the papers before you sign anything.
Experiencing a foreclosure is a frightening, traumatic situation, but keep all is not lost. Whether you are dreaming of buying one of the many Eden Prairie homes for sale or buying elsewhere, with hard work and planning you can reach your goal.
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