Have you ever filed bankruptcy? Spousal death. Catastrophic injury. Job loss. The reasons people file vary. Did you ever think you’d be able to buy another home after you filed? You can. Buying a St George home after bankruptcy simply takes a dedication to improving your financial situation, keeping good records, and time. But, perhaps, not as much time as you may have thought.
Buying a St George Home After Bankruptcy
How Long Do I Have to Wait?
The amount of time before a bankruptcy gets discharged from your credit varies depending on the type of bankruptcy filed. Chapter 13 takes seven years while Chapter 7 takes 10. But you don’t have to wait that long before you can become a St George home owner again. Waiting time depends on the type of mortgage loan you apply for as well as which type of bankruptcy you filed. With Chapter 7 bankruptcies, St George buyers must wait at least two years after discharge of the bankruptcy for an FHA or VA loan. With a conventional loan, it’s a minimum four year waiting period. For Chapter 13, wait times reduce dramatically. Buyers must wait two years after bankruptcy discharge to apply for a conventional loan. However, they may only have to wait one year for an FHA or VA loan. Of course, you cannot be late even once during that time and your FICO score must meet lender requirements to qualify as well.
What Should I Do to Prepare for Buying a St George Home?
Rebuilding Your Credit
A bankruptcy drops your score by as much as 240 points. That’s a major deficit to overcome. But, rest assured, you CAN overcome it. As soon as you begin your bankruptcy filing, start making positive steps to rebuild your credit. Make all payments on time going forward. That includes utilities as well as any other loans you take out. If you still have a credit card in your name, consider using it like a debit card to pay your monthly bills. Just keep in mind that it must be paid off each month. If you can’t do that, don’t fall on the crutch of relying on your credit card to pay bills or you’ll find yourself in the same if not worse situation before your bankruptcy. A consistent, responsible use of credit helps increase your overall score.
Also, pull your credit report after the bankruptcy to make sure that the discharge shows up for all appropriate accounts. Sometimes, they may creep back on to your report, causing your score to go down. Contact the credit reporting agency if this happens. Include a copy of the discharge showing that it should not be on your report.
Budget and Save
Creating a budget helps everyone when they buy a St George home. However, this holds especially true after a bankruptcy. Take the time to review all your expenses (food, entertainment, credit cards, rent, utilities, loans, etc.). Then compare this against your take-home pay every pay period. For some people, writing it down in a notebook or calendar helps. With others, an online tool like Mint or PearBudget works better.
Once you determine where your money goes, you can see what you can afford to put away in your savings. Set up an automatic deposit with your employer that goes directly into your savings account. If you don’t see it on your paycheck, you’re less likely to spend it. Better yet, use a completely different bank for your down payment savings account. This keeps temptation to spend down to a minimum as well.
Remember what it was like when you had to gather your paperwork for your bankruptcy? Keep it handy and organized for when you apply for a St George home loan. Lenders need to see bank statements, tax records, any investments, pay stubs and, of course, your bankruptcy information. While online spreadsheets are convenient, keep extra paper copies on file as well. You never know when you may be required to provide written proof of these records.
Time and consistency reign supreme after a bankruptcy. Maintain focus. Stay on track. Provided you meet all credit and financial requirements, you’ll be a St George homeowner again before you know it.
For more information on this and other St George homes for sale, please visit my Featured Listings page.