If you are one of the many Americans who have declared Bankruptcy, owning a home may seem implausible and maybe a little absurd. Most people applying for a home loan after Bankruptcy may need to wait as little as 2 years, and up to 4 years for a traditional loan depending on your individual circumstances. Government backed loans however , tend to be more forgiving and may lend as early as 1 year from the date of your Bankruptcy discharge. Whether you filed Chapter 7 or Chapter 13 Bankruptcy, the lender may have a different set of requirements.

If you feel you are ready to become a homeowner, here are a few tips I suggest to guide you along the homeownership process:

1. Reestablish your Credit – Open up a new revolving credit card and use it to fill up the gas tank and pay small bills. The key is to use it like cash. Pay off the your entire balance at the end of the month. Be on top of your credit report and see what is being reported and how it is being reported. Is that new credit card being reported to all 3 bureau’s? Are there any errors reported after your bankruptcy? Your credit score plays a huge role in qualifying for a Mortgage.
2. Pay your bills on time – Due to the sensitivity on the bankruptcy, a lender will want to ensure that you do not have any late payments on your credit. If you have a sufficient credit score but credit report shows a 30day late, that may be deemed for a loan denial.
3. Have a plan – As a homeowner, there are added expenses and maintenance that you are responsible for. Some may be paying for your annual property tax bill, obtaining homeowners insurance,  hiring a plumber to repair that leaky faucet, or replacing your roof. These expenses and maintenances come as part of homeownership. A good way in preparing for this is to set some funds aside every month in a savings account for house expenses.
4. Play with your budget – Compile your monthly income and expenses. From there see what you have room for and what you don’t. Just because you qualify for that high Mortgage, it doesn’t mean you should maximize on it. Your lifestyle and any annual subscriptions and costs should be taken into consideration such as your auto insurance,  or taxes. Having a well set plan and budget will keep you on track and eliminate any sudden surprises.
5. Work on saving for your down payment – Now that you’ve straightened out a budget, lets work on saving for your down payment. How much do you need to save? For a traditional conventional loan, you will want to save 20% of your purchase price although some loan programs are available for you to put as little as 3.5% down.
6. Shop for a Mortgage – Contact me and I can direct you to a Loan Officer to speak more in depth about what loan programs you may qualify for and what necessary steps may be needed to successfully own a home.

Curious to learn more about being a homeowner and your gateway towards homeownership? Call me at 626-731-4485. I’d be happy to speak with you or at least guide you to the right direction. Not quite ready? click on my Financial Tools here to browse guesstimated monthly mortgage payments based on prices.