Recovering From a Bankruptcy
7 Tips for Future Homebuyers
A bankruptcy is very difficult to go through and often times, surviving each day is all a person can handle. But planning for a successful financial future is critical and the sooner you begin that pather the easier it will be and the quicker you will recover. Especially if you want to become a homeowner.
A bankruptcy does not create a clean slate, it clarifies that you don’t have an obligation to your debt any longer. So improving your credit as quickly as possible is vital. Here are seven tips for anyone that is going through a bankruptcy. Know someone that is? Pass this along!
#1 – Monitor your credit through a site such as FreeCreditReport.com to make sure the debt included in the bankruptcy is reporting correctly. Check all three credit bureaus as information is not necessarily reported correctly to each one.
#2 – Avoid credit repair scams. Repairing your credit takes time. There is no magic wand that make credit scores go up. Time and re-establishing credit are tried and true methods to improving credit. See #3 below for the best way to start improving your scores.
#3 – Re-establish credit by getting a secured credit card with a local credit union as soon as possible. They usually require you to deposit $500 and they in turn give you a $500 limit card. Use it a few times each month but do NOT let the balance get above $200. Pay it off once the bill comes. NOT as you make charges. You want the balance to show up each billing cycle.
Get a second line of credit or vehicle loan at least 6 months before you want to buy a home to further help your credit scores go up. Always pay your bills before a late fee is assessed.
#4 – Avoid high-interest products. Be willing to drive a beater car and get by without for a while until you can rebuild your credit. A fancy new car and those rolls at Texas Roadhouse are not worth paying an exorbitant interest rate and having debt weighing you down.
#5 – Start saving. Even if it is only $10 a month. Then continue to increase it each month. Consistently saving towards a down payment is critical and helps you work towards affording a higher housing expense once you purchase a home.
#6 – Study money. I recommend The Total Money Makeover by Dave Ramsey and there are also multiple blogs and websites devoted to financial literacy. Become a student of money. Get obsessed with learning.
#7 – Don’t give up. This can be the most difficult step after going through a bankruptcy. It is a long road and there will be many twists and turns; and that isn’t fun. But the joy of coming out the other side a success and becoming a homeowner is priceless.
Want to know how long it takes before you are eligible to buy a home? Check out this video for details: https://mortgagesbybliss.com/bankruptcy-foreclosure-short-sale/. And most important of all… know that you have someone in your corner. All of us here at Team Bliss Mortgage want to see you succeed and become a homeowner. Reach out any time with questions.