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yankabilly4 · Jun 28, 2009, 11:01 AM

We lost our home in 2007 to foreclosure because of my husbands illness and medical expenses. We are more stable now and would like to re purchase a home. Can we do this or what do we need to do to achieve this for us?

nikosmom · Jun 28, 2009, 11:30 AM

Work on rebuilding your credit first. Due to the current economic situation, banks are being a lot more careful about granting home loans. Especially given that you have a recent foreclosure on your record, work on paying off your debts. Then try to save up to have a large downpayment.

ScottGem · Jun 28, 2009, 01:06 PM

With a fairly recent foreclosure, your credit score is probably under 500, almost definitely under 600. That's going to make it hard to get a loan unless you can put down a significant amount (30-40%).

So as Niko said, work on rebuilding your credit and saving a downpayment.

One possible alternative is a contract for sale. In such a transaction you pay the owner a monthy fee, often with a balloon payment a few years down the road. Maybe, at that, point, your credit and the amount of potential equity will be enough to get a loan. But, you need to be careful. If you don't fulfill the terms of the contract, you can lose everything you paid and will just be considered a renter.

kp2171 · Jun 28, 2009, 01:20 PM

Not an expert in this area, but was going to mention what scott said about contract sales as a possible option... and his point about meeting the terms of the contract are dead on... I know of one relative who entered into an agreement like this and then fell on hard times (his own doing) and lost a TON when he failed to live up to his side of the deal...

But don't be afraid to ask about "alternative" financing... if they say "no" it isn't a rejection of you... its just not their plan. If they say "ok" then you have an option... but you need to clearly know all the in's and out's of the contract.