This week I was working with a client who lost their home to Foreclosure and trying to help them secure a rental property. It can be done. Losing a home to foreclosure certainly lowers your credit score. Additionally, the foreclosure can remain on your credit report for up to seven years from the date of the foreclosure filing. However, you could rent a home after you lose the home to foreclosure but before it hits your credit report. If the foreclosure is not showing on your credit report yet, then that will give you an advantage in renting a home. As you pay your bills on time each month, your credit score will increase over time, which will make it easier to rent a home.
A landlord is concerned with the stability and financial responsibility of tenants. Landlords screen to ensure that each tenant can pay the rent each month, will take care of the property, and most likely live peacefully with the other residents in the community.
However, the presence of a foreclosure on a credit report does not prevent
subsequently renting a home. Landlords require prospective tenants to complete
a rental application, sometimes with an application fee, and a criminal background authorization form. Landlords will be more sympathetic to a renter who discloses a foreclosure than one who tries to hide it.
Employment verification is a vital part of the rental application process. Both the amount of income and the length of time on a job have a huge impact on the applicant’s ability to pay the rent. Most landlords charge a first and last month’s security deposit (in the amount of the rent payment). The upfront security deposit is based on the risk level
of the applicant and lowers the financial risk to the landlord. A person who has lost a home to foreclosure will most likely be charged a higher security deposit than someone who has never had a foreclosure.
Typically, the stronger the application, the higher the chances the applicant will be accepted as a tenant. For instance, an applicant who has worked with the same employer for five years, makes three times more than the monthly rent amount, can pay the
security deposit requested, and has a clean background with a foreclosure can certainly be accepted as a tenant for a home. Yet a person who has just started working on a new job, makes slightly more than the monthly rent amount, can pay the security deposit requested, and has a spotty criminal background with a no foreclosure on his credit report may not be accepted as a tenant.
Even with a foreclosure on a credit report, a person can rent a home by demonstrating the ability and likelihood of paying the rent. An individual who has a foreclosure on his credit report, yet keeps his other payments current, is not as risky in the eyes of a landlord.
The landlord is much more likely to view the foreclosure as a one-time financial blunder. Landlords are more willing to forgive a foreclosure reporting if the applicant is successfully paying all of his other bills on time.
When there are more homes for rent on the market than there are renters to rent them, it is called a “renter’s market.” In this case, there are many homeowners and landlords who need to get their mortgage payments covered. This is the best time to rent a home since
homeowners and landlords are much more flexible in accepting a tenant who has
lost a home to foreclosure. A seller’s market is when there are more renters and buyers than there are homes to sell to them. Obviously, it will be much harder to rent a home with a foreclosure on your credit report during a seller’s market.
I am a REALTOR with Liz Moore & Associates Also; I am part of the Liz Moore & Associates’ Military Team which specializes in homes for sale in James City County, Newport News, Hampton, York County, Poquoson, and Williamsburg, VA as well as surrounding markets. I offer Active Duty friendly support to families relocating to Langley Air Force Base, Ft. Eustis, Yorktown Naval Weapons Station, and Cheatam Annex. When you PCS to Hampton Roads, VA you will find that I understand that when a family member joins the military, the entire family belongs…thank you for serving our Country, and I look forward to serving your real estate needs!
When you are transferring to Langley AFB, Ft. Eustis, Yorktown Naval Weapons Station or Cheatam Annex, if you’re interested in buying a home for sale call 757-651-3763 or e-mail me at firstname.lastname@example.org