One of the main worries foreclosure victims are faced with is the question of where to go once the foreclosure process is complete. Property managers generally conduct a credit check, and your recent foreclosure has probably left your credit in shambles. Fortunately, the recent economic downturn has changed the impact your credit scores have on your ability to rent, and finding a rental home or apartment after foreclosure may not be as difficult as you think.
If you don’t qualify for a loan on your own merits, asking an individual with good credit to co-sign for you helps ensure an approval. A rental application is no different. If you don’t meet the minimum credit requirements for the home or apartment you want, having a co-signer reduces the landlord’s risk and can help you get your foot in the door—literally. An added benefit of co-signing for an apartment is that most apartment managers don’t require the co-signer to live with you in order to qualify.
As embarrassing as it may seem to explain to your prospective landlord that you recently lost your home to foreclosure, you’re not alone. A total of 50,759 U.S. properties started the foreclosure process in Q1 2022, up 67 percent from the previous quarter and up 188 percent from a year ago. As a result, many landlords and property management companies have had to alter their credit requirements to keep up with the “new normal.” Because of this, your foreclosure may not be enough to derail your rental application.
If your landlord only pulls credit scores, however, be prepared to explain the foreclosure, the circumstances surrounding it and how those circumstances have changed. Your task is to demonstrate to your prospective landlord that, while you couldn’t pay your mortgage, you can pay your rent.
The reason landlords are often hesitant to rent to people with poor credit scores is because those individuals are a higher risk for the complex. You can reduce your landlord’s risk by offering to pay a higher security deposit. Finding the extra money to pay a security deposit—especially one that’s higher than average—may be challenging immediately after foreclosure, but doing so could ensure that your family has somewhere to go when the foreclosure process is complete.
Large, corporate apartment complexes don’t have wiggle room when it comes to approving applications. If you don’t meet the income and credit requirements, you don’t get the apartment. Apartments, however, aren’t the only rentals available. In a risky economic climate, homeowners who can’t sell their homes but need to move are choosing instead to rent out their homes. Many owners opt to select their own tenants rather than paying a property management team to do it for them. A private owner generally can’t pull your credit on his own, and may only require proof of income before letting you sign a lease. If the landlord does ask for copies of your credit report, he’s more likely to empathize with your circumstances than a property manager who represents a realty company or corporately-owned apartment complex.
Although foreclosure ravages your credit rating, it doesn’t leave you without housing options. Part of a property manager’s job requires filling as many rental units as possible. Given the vast number of families displaced by foreclosure, this often means bending the credit rules. You may need to make minor compromises, such as settling for less space than you’re accustomed to or living in a different school district, but you can find rental housing for you and your family after foreclosure.
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