Losing a home is not what foreclosure is all about.  It commences a lot of financial problems immediately and even long term.  Just when you have gotten over your financial bondage and are already ready to start borrowing again, you realize that some things are really going to be a bit tougher on you or on anyone who has once defaulted on a loan, especially on a home loan.  People with foreclosures on their credit histories, especially when the foreclosure is relatively recent, find it hard to get their mortgage loan applications approved by apprehensive mortgage lenders.

No one can deny the first impression a foreclosure makes, which is that you are a client who cannot keep his or her word, because you once promised to repay a large debt, but eventually just walked away from it.  Whatever the reason might have been for getting your home foreclosed, it is very most likely that you will not be approved for a home loan at any interest rate in a few years since the foreclosure.  But this is a case to case basis.

It sometimes takes seven years before you regain the capacity to get an approved application for mortgage loan after a foreclosure.  You won’t really have anything to do about it but wait.  Blame this on the mortgage loan approval guidelines set by Fannie May, where you’ll find out about this seven-year waiting period.  A lot of lenders follow the standards of Fannie May because they want to take on the chance to eventually bundle several mortgages together and sell them to Fannie Mae.  A loan will not be eligible to be packaged and sold if it does not conform to Fannie May standards.

According to Fannie May standards, homeowners who encounter foreclosure are not eligible for mortgage loan approval for a period of five to seven years.  However, if the foreclosure was a result of certain circumstances that are deemed by Fannie Mae to be beyond the homeowner’s control, the time a person must wait to apply for a mortgage loan may be lessened to a minimum of three years.  These uncontrollable circumstances refer to the death of one of the homeowners or a job transfer that forces the homeowner to move and go into foreclosure after the home does not sell within a realistic time period.  It is necessary to document these circumstances and have Fannie May approve them.  Fannie May could get too specific, too, and won’t cover all circumstances beyond homeowners’ control.

Do not be discouraged if you get disapproved for the first time or in for the first couple of times you try.  You can increase your chances of eventually getting approved for a mortgage loan when you are eligible to apply, by increasing your credit score.  You can ask a mortgage broker specializing in subprime mortgage loans to help you on this part.  A substantial down payment may also increase your odds.