Home Loan After Bankruptcy…Need Advise
Question: Hello everyone. Just to give you a little detail about myself. I am 25 years old. I accumlated some debt while I was in school and couldn’t handle the payment anymore so I filed for bankruptcy back in June of 2002. It has been almost 3 years now. Since then, I have been in a stable job making around 60k a year. I am single with no kids. Here are my expensive that I have which isn’t much. 1. rent with utilites is 700 2. 10k student loan with a 180/month plan. 3. Insurance 150/month
Thats pretty much it. I have no car payment. Insurance isn’t that much. I don’t have any credit card except a debit card from bank. Other than that, thats it. I was wondering what are my chances of getting a house loan? how much of a loan? what are my interest going to be? My FICO score is like 580 or something. I have about 10k saved up. I have about 12k in 401k investment. Other than that, thats pretty much it.
Some other question:
how would I improve my chances of getting a good home loan? I know about opening a secure bank card, how do I go about doing that? what company are good? and what company I should stay away from?
Thats pretty much it. If I can get some advise, I would greatly appreciate it. Thanks for reading.
Answer: The only way you will know for sure is to go to a mortgage lender (or three) and ask to get “pre-approved”. They will run through your situation, and tell you the real deal.
A 580 is pretty weak, but with your savings and income, you will probably qualify for a brokered loan, perhaps at 2 or 3 percent above the market rate. Who knows until you ask. Keep in mind that $60K in income is not going to support the kind of payments for a very expensive house. Think starter house.
As it turns out, renting is a great deal right now. Many rental properties are renting for far less than what they should cost based on their market value. Perhaps your best strategy would be to find as cheap of place as you can to rent for a few years. This will let you build up more cash for a better downpayment, and time will elapse, which will dramatically improve that lame credit score.
how would I improve my chances of getting a good home loan? I know about opening a secure bank card, how do I go about doing that? what company are good? and what company I should stay away from?
It always looks better on a credit record if you pay back your charged-off debts. That especially helps when you are iffy, and a human has to decide whether or not to grant your loan. Very few people, however, bother to payback their creditors after a charge-off or discharge, but God is watching and taking notes. Here’s some info coming straight from the horse’s mouth…..
I filed Ch. 7 in August 2003, and was discharged in Oct. 2003. I am like you, single, no kids. I am now home shopping since I have been approved for an 80/20 loan of $140,000 at a combined interest rate of 6.5%. What this means is that I am financing the first 80% at one rate, and a second mortgage of the remaining 20%. My payment will be $1050. This, on a $40k a year salary. Now, the one exception to my situation and yours is our credit scores. Mine, less than 2 years out of BK, are 692, 703, and 713, respectively. I have successfully disputed 8 of the 11 accounts I had included in my bankruptcy off my credit report. On 2 of the reports, I succussfully disputed the bankruptcy from the public records. Once the remaining 3 accounts are off those reports, one would not be able to tell that I had filed if they looked at those reports. Since we have a “moral authority” in here, I must add that all of my disputes were per the FCRA. If an item has *anything* wrong with it, you have the right to have it corrected or deleted from your report. USE THIS RIGHT!
I will also say that, in the 16 months since my discharge, I have established 7 positive credit card accounts, and 2 installment loans. The disputes of my report and these positive tradelines have taken my scores from just above 500 after I initially filed, to where you see them now.
As the other poster has pointed out, you should continue to rent for now. I would suggest taking some of your savings and opening a secured loan. For $20 in interest for the year on a $1K loan, it is worth the score boost on your report. You could also get a secured credit card to help build your scores. Trust me, once you do that, you will get many more. I have 3 cards now with $5K limits that all have a 0% interest rate through 2005. Not bad for my fresh start.
Stay positive. Read. Learn as much as you can about credit repair. Establish good accounts. Then you can sit on a nice rate mortgage.
Do yourself a favor. Visit www.creditboards.com to learn more on credit repair to put yourself in the best position for a mortgage.
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