How to Make Sure You Get Financed for a New Home
Bankruptcy and Foreclosure
After the experience I have had trying to get financed for a new home, I'm here to lend advice to anyone else that is going through the same struggle. Yes, a struggle is exactly what it can be if you don't have everything just right. Four years ago, my husband and I lost our home to foreclosure after our adjustable mortgage rate went through the roof. We then filed bankruptcy to keep the bank from holding us responsible for the difference between what we owed and what the house sold for after we lost it (yes they do that). We have been renting a house ever since and for the last year trying to reestablish our credit. It isn't an easy thing to do. Personal finance companies don't help your credit a lot, especially if you pay the loan off early- in less than 12 months. If you can get ONE, credit cards can help build credit fast but be careful with them. Never let your balance get over half of your credit limit, and pay it off each and every month! The best thing is to use the card instead of cash to purchase your gas each week, but save that cash to go toward your credit card bill. Never purchase anything on a credit card that you don't have the cash to pay for unless it is truely an emergency!
Could This Be Your Dream House?
Steps to Getting Approved For You New Home
Here are the main things that your need to have ready before calling a lender:
1) You must wait at the very least three years after a bankruptcy or foreclosure settlement. Make sure to keep up with every document that goes along with either one of these actions, you may need to produce exact dates for the prospective lender.
2) Have a credit score with at least two of the three major companies of at least 640. Some lenders may tell you 620 but it makes things more difficult.
3) Have at least 3 lines of open credit in good standing showing on your credit report. These should preferably be lines that have been open for 8-12 months.
4) Make sure you have been paying all your utilities, rent, and any other items on time every month. Also make sure you have documents (statements or reciepts/bills) to prove that you have paid on time.
5) You should also have at least two months worth of fall back money in a savings account that can be verified by the prospective lender. This will show them that should something happen to your income source you will still be able to make payments.
6) Be prepared to put at least 3.5% of the purchasing price as a down payment and have some closing cost money. If you are able to get 100% financing and closing costs paid for by the seller then that's great, you have even more fall back money to put into that savings account.
If you follow the guidelines and have a decent and steady source of income then you should have no problems getting a loan for that new home. Good luck and happy house hunting!
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