The following is a great, no-nonsense and straight to the point article written by Lenn Harley in Virginia about your credit rating and how it affects your ability to purchase a home.
Pay special attention to the portion of the article entitled "What to Do".
INTERESTED IN BUYING A HOME? Fact is, you may not be able to play today if you didn't pay yesterday!
A GOOD CREDIT RATING IS A CONSUMER'S MOST VALUABLE ASSET. The Tax Credit and low interest rates have inspired many folks to consider buying buying a home who never seriously considered that alternative to renting. After all, it's the thing to do these days. Or is it??
Fact is, you can't play if you didn't pay. . . OR, until you pay.
Inspired by a timely post by Ellen & Doc Stephens about credit repair, I suspect that many ActiveRain agents and loan officers have had contacts from consumers who want to buy, but are just simply not credit worthy. Hardly a day goes by that I do not receive a phone call from a consumer who has paid $Thousands of Dollars to a "credit repair" company only to find that their credit has not improved.
Working with a competent loan officer who will tell folks what they really need to do to be able to qualify for a mortgage loan is the best way. Or, if they really need the structure of a service to manage their money, consider. . . .
CONSUMER CREDIT COUNSELING. If it's really out of the consumer's hands, CCC is the only way to go. They are non-profit and a mortgage loan can be obtained with CCC as a credit reference.
Folks just have to understand that bad credit didn't happen to them, they made it happen. They have to clean it up.
Many folks have filed a Chapter 7 bankruptcy in past years to liquidate their bad debt. Sadly, their credit report shows late payments in the past 6 months. WHAT?????
AFTER BANKRUPTCY. Yes, you can obtain a mortgage loan after bankruptcy. 2-4 years following discharge, a consumer can obtain a mortgage loan IF, THEY HAVE. . .
- Established new credit
- Made payments on time
- Have no late payments
- Qualify for the payment
- Write a good explanation for the cause of the bankruptcy
- More depending on your individual cause of the bankruptcy.
No, it isn't automatic. If you have damaged your credit in the past, you will have to earn the ability to obtain a mortgage loan. Folks who filed bankruptcy because of medical expenses will find it easier than folks with discharged consumer credit debt.
If you sold your home through a short sale in the past year, it is unlikely that you'll be able to get a mortgage loan today. I have received several calls with this scenario, often within months of a Short Sale. Not likely to happen.
WHAT TO DO.
- Stay out of the mall.
- Make credit card and other payments when they come in the mail, not a day before the due date.
- Don't shop for automobiles while considering buying a home.
- Don't co-sign for anything for anyone.
- Develop a plan for saving that extra money rather than spending it.
- Stay out of the mall.
GOOD LUCK!! There can be a wonderful home owning experience in your future.
ONLY YOU CAN MAKE IT HAPPEN.
Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988. Helping home buyers in Maryland and Northern Virginia. .
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