Ask The Lender: After a Bankruptcy
Posted July 22, 2008
Question:
I went through bankruptcy back in January and wonder now what chances, if any, I have to get a home. This may be completely fruitless at this time, but I would like to set some stepping stones so that I would know what I need to do along the way to prepare myself to better be able to get a loan.
Thanks,
Patricia
Answer:
Patricia,
Thanks for the contact. The recent bankruptcy would present the biggest challenge in obtaining a mortgage for buying a home right away. Typically most lenders are looking for 2 years of re-established credit after a bankruptcy is discharged. So while you are going through those re-establishing years, here are a few tips:
- Pay everything on time (beyond just credit debts… utilities can help create alternative credit when the time is right)
- Pay everything by Check or Debit Card (you want hard proof of timely payments)
- If you rent, pay by Check! (This is especially important to prove!)
- Open a credit card and use it effectively to re-establish credit (see http://startovercredit.com/build-positive-credit.php for more info)
- Build a savings account. Lenders like to see money in the bank for a cushion… gives them a sense of security.
- Keep debts to a minimum. When you are rebuilding credit, use credit cards (revolving credit) properly and avoid installment loans just to build credit. In other words, don’t buy a car unless you have to. Installment loans take forever to make a positive impact on credit.
These should help get you on track to buy a home again in the near future.
If I can be of any assistance, please give me a call.
Ed Nailor
704-651-8704 Phone
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