Due to the rush of foreclosures lately many are wondering what their options are for buying a home after foreclosure. While foreclosure is damaging to your credit, the reasons behind your foreclosure may affect how quickly you can buy your next home. Lenders look at things other than credit score when considering you for a home loan, and if they fail to see why you were foreclosed upon, they might assume you are what is known as a “walk away.”
“Walk aways” are what the loan industry calls those who have purposefully defaulted on their mortgage when they could still afford to pay it. This is done typically because the amount owed on a home is greater than the price; many believe they can simply walk away from the mortgage, allow the bank to reposes the house, build up their credit again and buy a new home. Be wary, though, as if lenders suspect that you have done this they will be hesitant to allow you to borrow. What is typically a 2 to 5 year waiting period for buying a new home could be increased to 7 years or more.