Can You Get a Mortgage After Repossession?

by KC Hernandez ; Updated July 27, 2017
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Your car may be long gone, but the effects of a repossession on your credit remain for years to come. Depending on the date of the repossession and how you handle any leftover debt, you may be able to get a mortgage after a repo.

Lingering Debt

Auto lenders repossess vehicles and auction the cars to recover their losses. You're responsible for the difference between the sale proceeds and the outstanding loan debt. Repossessions can appear on credit reports as unpaid, charged-off, settled, or delinquent and in collection, depending on how you handle the account after the repo. Mortgage lenders usually require you to pay off any remaining balance before approving your home loan.

Settling Up

Pay off the remaining balance on a repo before you apply for a mortgage. The effects of a repo on your score diminish over time, and the account disappears after seven years. However, paying before you apply improves your score sooner and shows the lender that you have the money and ability to manage your debts. Be prepared to write a letter explaining the circumstances that led to the repo and that you've fixed your financial misstep.

About the Author

K.C. Hernandez has covered real estate topics since 2009. She is a licensed real estate salesperson in San Diego since 2004. Her articles have appeared in community newspapers but her work is mostly online. Hernandez has a Bachelor of Arts in English from UCLA and works as the real estate expert for Demand Media Studios.

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