Despite many of the rumors out there, a foreclosure doesn't at all mean you'll never be able to get a mortgage again. In fact, you may qualify for a new mortgage much sooner than you'd think.
Here's how your credit history works. If you are the victim of a foreclosure, it will remain on your credit history for 7 years. After that time, it won't appear on credit background checks when you apply for a mortgage. So in a worst case scenario, you won't be able to take out a new mortgage for 7 years.
However, many foreclosure victims end up cutting that time in half by being proactive and taking steps to fix and protect their credit. It's extremely important after a foreclosure to make sure you stay on top of your credit. This means making all payments on time–car payments, student loans, credit card bills–anything that may have an effect on your credit score. Every little bit helps to improve your history.
Also, challenging your foreclosure and any other negative credit checks can have a positive effect on your credit score as well. Basically, anything you can do to prove to the credit companies that you're responsible with your credit will improve your score and put you in a better position to get a mortgage, often within a few years of foreclosure.
Another great asset when applying for a mortgage after a foreclosure is to save up for a big down payment. The bigger down payment you make, especially if you can get in the neighborhood of 20%, the less of a risk you are to the lender. A bigger down payment can also earn you a better interest rate.
A foreclosure is by no means the end of your chances to own a home of your own. It will take some responsibility to make sure your credit improves, but it can be done, and within a few years you'll be back on the road to owning your own home.
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