Sometimes bad things happen to good people. Even the most financially responsible people can go through tough times, leading them to bankruptcy, a foreclosure or having to go through a short sale of their home.
More than 900,000 personal bankruptcies were filed last year and in 2013, that number was more than a million. As the economy rebounds and people’s lives get back to order, many are beginning to wonder if their dreams of home ownership are over.
The good news is that it will be possible for many of these people to purchase a home, it just takes some time and careful planning. And the sooner you start planning, the easier the process will be!
In nearly all circumstances, if someone is looking to secure a new mortgage after going through a bankruptcy, foreclosure or short sale there will be a mandatory waiting period. Depending on your situation that waiting period could be less than a year or much longer. In the case of a bankruptcy, that waiting period doesn’t start until your bankruptcy has been discharged. The rules concerning the waiting period vary by the type of mortgage you will be applying for and can be very complicated, so it’s best to set up a free consultation with a mortgage loan originator as soon as possible.
While you go through the waiting period, there are still some things you can and should do to become more desirable to a mortgage lender.
An easy way to start is by rebuilding your credit score. This will not be an overnight process, so start as soon as possible. Use your credit cards responsibly by building up a balance that you can also easily afford to pay off on time, or even early, each month. This will show mortgage lenders that you’re a responsible borrower who can be trusted over the long term. If your credit cards were cancelled, you may need to look into a secured credit card, which requires the borrower to have a cash deposit on hand.
While we’re on the topic of credit, it will be important to make sure you review your credit report regularly for accuracy. While a financial hardship may leave a mark on your credit score, you’ll still want to review your credit report regularly to ensure everything is accurate and work to remove any errors as soon as possible.
A large down payment can also go a long way in helping to make you more appealing to a mortgage lender. It not only shows you are willing and able to save, but it may also help you secure a lower interest rate. As soon as you can, start saving money so when the time is right, you have a down payment ready and you’re not scrambling to save as you start looking for your next home.
Mortgages are customized based on each borrowers personal situation and definitely not “one size fits all” products. If you’re interested in starting down the path to home ownership, click here to find the HomeBridge office closest to you. HomeBridge is a national lender, so even if the school your child attends is out of state, our associates can still help you with your mortgage needs.
A consultation is always free and there is never any obligation to work with HomeBridge later on, even if you do decide to purchase a home.