Business Q&A

Question:
There is also a discharged bankruptcy 2 years ago….

Answer:
Sometimes bad things happen to good people.

Yes there is a way. FHA requires a 580 FICO score, no late payments in the last 12 months, no outstanding unpaid wrote off debt (not in the bankruptcy). You may re-establish your credit using your rent, phone and utility bills, cell phone bill, any recurring debt that you have established since the bankruptcy in essence (shows responsibility in keeping financial commitments). You need time on the job (shows stability) of 2 yrs or more, or use of your college degree also counts provided the degree is for your current vocation. Child support will count against you if you pay it, can be used for qualification if you receive it.

You'll need to: get a copy of the discharged bankruptcy; write a letter of explaination as to why you went bankrupt (example: broke both legs and could not work nor pay the bills after I was hit by a drunk driver and the insurance would not pay up even though it was his fault) and state that you have learned a valuable lesson regarding finances; take a course in financial responsibility (see if Financial Peace University is available in your area or if one will be in a town close enough to attend or the correspondence course perhaps will do). The last one is a strong suggestion as you need to stack the cards in your favor with your history.

Go to a reputible bank and ask to speak with the mortgage officer. Go in person, no phone call. Take all you have gathered as I have said. Also take your last 2 check stubs, your last 2 yrs W-2 from your taxes, and just tell them the truth. Do not blame somebody else for your problem, you have responsibility for some if not all so take your share. There is less pain in taking responsibility and telling the truth than blaming somebody else.

Refuse to go with a B-C lender, you should be able to go class A with FHA as long as you have met the criteria laid out herein. This is not a guarranteed loan nor an application. I am not a loan officer but have dealth wth a lot of people like you (and have also been bankrupt) and this has succesfully worked without fail.

Lenders WANT to loan money, they do need reasonable cause to believe you will repay the note. Show them you have what it takes to be trusted with the opportunity. They care not that you may be a different race, ethnic group, married, single, handicaped, or nothing else, only that you have the means to repay the loan.

For FHA loans: 3% down payment, seller can pay the closing and prepaid expenses. Have your real estate broker (don't have one? wrtite me and I'll connect you with a good one) write your offer to buy with the seller paying your closing and prepaid expenses. They will run about 3% in closing and somewhere around $1000 +/- a bit for prepaid expenses. But have the financing in place first as it will take away a seller's apprehension regarding the sale and your ability to do a deal. Do not get a letter with your max qualification amount on it, rather get the loan officer to match your loan committment letter to the contract price. In other words, if you qualify for a $150K home, but wisely settle for a $125K home have the letter state that you qualify for the $125K home subject to what ever they usually make it subject to.

By taking all your info as I suggested up front to your lender you will also know what price range home you can look for. I really suggest that you NOT shop for the max home you can afford, but choose less for now, live there a few years building equity and then sell and move up. Focus on paying the principal balance, do not go buy a new car or go on a wild spending spree if you qualify for and buy a new home. You will end up bankrupt-again.

Everybody has 2 lists they operate from: the “I want” list and the “I need” list. The I need list will never get you in trouble. The I want list will forever get you in trouble. Not to preach, but in the Bible God promised that you will have what you need, just ask Him for it. The reason for asking is to help you understand your need. Most people never figure that out. I assure you that a need list will always work, a want list will break you. Write out what you need and what you want. If they cross over as the same then figure how you can best meet the need and want without breaking the bank. Example: I need a car, I want a new car, but I do not need a big car payment. How can I meet the need for a car and the want for a car? Buy a 2-3 yr old used car that you can pay cash or substantial down on and get several yrs use out of it. Then save money in the mean time until you are ready to buy a newer vehicle- if you need it.

You will amaze yourself at the results and how well you will do. And you will have a home of your own. Pay your self first by paying off debt quickly, and choose wisely what you invest in. Appreciating assets (good like a home) or depreciating assets (bad as in expensive car, expensive clothes, jewelry, etc) should be looked at hard, lest you go back to where you came from- bankrupt.

I have given you an answer, how to get there, and how not to repeat history. Therefore learn well and do not repeat what got you in bankruptcy. This is sound advice, I have lived it and I teach it to people like you all the time. Even former homeless people have bought homes using these instructions. Good luck.

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