September 2007
LIFE AFTER DEBT: GETTING A HOME LONA WITH LESS-THAN-PERFECT CREDIT
You're not proud of it, but your credit is less than perfect.
You've gone through the stages of blaming the credit card companies for pre-approving you and pushing you into it, blaming the consumerist society we live in for setting the standards, and attributing it to a school system that taught you nothing about finances beyond adding pennies to nickels.
You're past that. You've read some books, found a system that works for you, you've created a budget, and, whether you filed for bankruptcy or not, you now have the situation under control.
Now you're ready to buy a home. But you need a home loan to do it with. Where can you go for help?
Your credit union, of course.
Because you're a member here, if there's a way to make the loan happen, we will make it happen. Here's what you can do to prepare for purchasing a home, even if you're not yet ready to do it.
1. Get a credit report. Find out what the problems are early on, and see what you can do about it. A few late payments may not be a huge glitch, but if there are tax liens and/or write-offs, contact your creditors and try to negotiate a payment plan you can live with.
2. Stay away from bankruptcy. It's probably the worst thing you can do to your credit record. Come to think of it, it is the worst thing you can do to your credit record. Contact the credit union for resources that can help, but avoid lawyers who ‘advise' you to file chapter 7 or chapter 11. Their livelihoods depend on your giving up your good credit standing.
3. If you did file for bankruptcy, recognize that the illness was not cured because your debts were legally cleared. Ethically, you may feel you still have obligations. But even more than that, you haven't changed. You're still used to living on debt and in debt. The only way to change that is to seriously begin living without debt. Some excellent books on the subject may help. Most of all, keep your bills-all your bills-up-to-date and paid on time once the bankruptcy has been discharged. Failure to do so could mean that even the credit union won't be able to approve your home loan.
4. Establish a spending plan you can live with. There's a lot to be said for the clichéd advice to "pay yourself first."
5. Keep payments on time for two years. You need a minimum of two years of good credit after a bankruptcy before you can qualify for a home loan. In some extreme cases, you can get a home loan after 12 months, but you must have an excellent reason (such as a medical situation) for filing for bankruptcy. It is vital at this point to keep your credit picture-perfect.
You can buy a home with less than perfect credit, but be prepared for a higher interest rate and less favorable terms. Find out exactly what it will take for you to become a homeowner by calling the credit union and setting up an appointment for a free home buying consultation today.
For more information on Great Basin Federal Credit Union's mortgage program, contact our Mortgage Loan Officer, Cindy Kendall at 775.789.3117 or via email at cindyk@greatbasin.org.
