So you have decided to take that bold step
towards the American Dream of home ownership but you don't know your credit
scores. You are bit nervous because you've made a few late payments here and
there or may even have gone through a bankruptcy. Experienced mortgage
brokers understand that life happens and credit reports can get bruised by
events such as unemployment, illness or other financial difficulties. Be
honest and up front with your mortgage lender. Disclose everything you are
aware of. They will soon have your credit report and that itself will reveal
your credit worthiness.
Statistics say that the average household has more that $10,000 in credit
card debt. If you too are swimming in excess debt its time to get a grip on
it. Depending on where you stand, consider these recommendations:
Get a handle on your spending. I challenge you to keep track of every dollar
that you spend over the next 30 days. You will find that you are spending
hundreds if not thousands of dollars on unnecessary items. Do not use credit
cards for things that you consume quickly like meals or gasoline in your
car. There's no faster way to fall in debt than to use your credit cards for
things that you cannot pay in full when the bill comes around.
Avoid the minimum payment trap. Credit card
companies love this. They rack up high yields on the consumer that does not
pay in full each month. The worst part of it is that most people are paying
interest on dining out, groceries, even the clothes on there back. Do not
pay the minimum as you are more than likely only covering the interest.
Lets say your credit is already shot up in
pieces and these first two recommendations are simply too far out of reach.
Find out where the nearest Consumer Credit Counseling Service is located and
schedule a consultation. The mission of CCCS is to promote sound financial
management. They offer expert financial counseling and work with your
creditors to reduce the interest and get you on a reasonable schedule to
paying off your debts.
Should CCCS not be an option you should consider filing a Chapter 13
bankruptcy. Also referred to as a wage earners plan, a Chapter 13 BK enables
you to develop a plan to pay off all or part of your debts. Repayment plans
are typically three years but can be stretched to five years under certain
circumstances. Once you start this plan, creditors are forbidden from
continuing collection efforts.
If you are so far in debt that you can never repay it, then the best
solution may be a Chapter 7 bankruptcy. A Chapter 7 bankruptcy is the least
desirable from a credit standpoint, but you are typically out of bankruptcy
in 6 months and you don't have to repay any debt. The disadvantage is that
this shows on your credit report for 10 years from the date of filing your
bankruptcy. FHA guidelines state that you can be approved for a mortgage two
years from the discharge date of a Chapter 7 BK. You cannot have accumulated
any negative credit since filing and need to have re-established at least
three trade lines. Secured credit cards are a perfect tool for accomplishing
this task.
Savings is the key. Make it a personal goal to build cash reserves equal to
three months of living expenses just in case of an emergency. Mortgage
lenders love to see stability in borrowers just for that reason. Savings and
liquidity could determine whether or not you can get approved for a home
loan.
As far as credit is concerned you will need a minimum credit score of 580
and a clean slate for the most recent 12 month period. That means no late
payments on anything. Also make sure you have at least three active accounts
working for you. Credit cards, department store cards, gas cards, car loans
and even a gym membership so long as good pay habits are being reported each
month.
You do not want to be renting forever. Get a copy of your credit report with
credit scores before you even think about applying for a home loan.
Just apply here, We provide
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