This is a
problem many people today are facing. Just because you have filed for
bankruptcy, have bad credit, or have gone through a foreclosure doesn’t mean
your dreams of homeownership are gone. This week’s blog contains steps
for you to take in order to repair your credit so that you can buy a
home. Team Johnson can help you every step of the way. We work with
a network of people including mortgage brokers and attorneys that are only too
happy to help.
Pull Your Credit Score
As the saying
goes, forewarned is forearmed. You need to know where you currently
stand. Any mortgage firm or lending institution can pull your credit
score with your permission. Or, you can pull it yourself by going to www.annualcreditreport.com. Check the report for accuracy and report any
errors to the credit agency.
Work Towards Fixing the Problems
If the debt is still with the original creditor call that company. Tell them the situation and see if they can offer you a deal. If you can avoid having your account charged off, do, but do not get pressured into a deal where other debts will go past due because you are not helping your credit.
Once a debt has been charged off the damage has already been done. It has already impacted your credit. The company has also already written off your debt and it is not impacting their stocks anymore. They sell the debt for pennies on the dollar to a debt collection agency. Do not let these companies bully you. Also, do not get sucked into debt consolidation companies. These companies often charge outrageous fees just to make calls you can do yourself. They sometimes pay themselves first and do not guarantee they actually get you released from the creditor. Debt collection agencies will offer a large lump sum payment or payment options. If you make payments to a collection agency, little things like extra interest or handling fees could keep your balance from ever going down. In some cases, making a payment restarts the statute of limitations. Wait until you have one lump sum. Remember, the older the collection, the more eager they will be to settle. If they are hounding you, send a cease and desist letter or there are apps that you can download to block an incoming call.
Use Credit to Repair Credit
If you have a credit card be sure you pay it off on time. Never carry large balances. If you have large balances pay more than the minimum even if it is just $5.00 more and be sure to keep the card active. This looks good on your report. If you don't have a credit card, try to get a "secured" credit card offered by your bank wherein the amount you deposit into the account is the amount of credit you are allowed.
The Waiting Game
The period between bankruptcy filings is seven years, but
the ding to your credit report stays for 10 years. For better rates with
a conforming loan, the wait is four years after filing bankruptcy. FHA
guidelines are two years after a foreclosure,
which means you could qualify for as little as 3.5% down. Hard-money
lenders will often make loans six months after filing bankruptcy or a
foreclosure, but will a require 20 to 35% down payment. The interest rate will
be very high and the loan terms are not as favorable; many will contain
prepayment penalties and be adjustable. Subprime lenders (not to be confused with hard-money
lenders) are no longer making 100% financed. To improve your
qualifications for a loan it helps if you can show steady employment for more
than 2 years, save a down payment of at least 10%, and do not fall behind more
than 30 days on any bills.
Repairing credit simply takes
time. Remember do not give up. Team
Johnson understands this can be a trying time. Many people get
frustrated, throw their hands in the air, and give up. Stay the
course. We can help you every step of the way and once we’ve gotten you
back on track we can help you find the home you’ve worked so hard for.
Give us a call 904-495-0146 or email teamjohnson@watsonrealtycorp.com
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