| Having a bankruptcy, foreclosure, or short sale on your | | | | 3. Evaluate your economic situation: |
| credit report creates great challenges when it comes | | | | A. Is your employment situation stable or unstable? |
| to buying a home, but with time and hard work, it still is | | | | B. How much house can you afford to buy (including |
| possible. Here's how to overcome these challenges: | | | | taxes and insurance) and still keep your total debt to |
| 1. Mark your calendar accordingly: | | | | income ratio below 40%? |
| A. If you filed Chapter 13 Bankruptcy, you may pursue | | | | C. How much money do you need to save for a |
| owning a home 1 year after filing. | | | | 3.5-5%+ downpayment? |
| B. If you filed Chapter 7 Bankruptcy, you may pursue | | | | 4. Prepare 6-12 Months Prior to Purchasing a Home. |
| owning a home 2 years after your discharge date. | | | | A. Monitor interest rates. |
| C. If you had a foreclosure or short sale, you may | | | | B. Choose a mortgage lender who does FHA or VA |
| pursue home ownership 3 years from the date of the | | | | loans because these programs give you a great low |
| sheriff's sale/auction or short sale on your previous | | | | fixed interest rate even with a bankruptcy, foreclosure, |
| property. The only exception to the three year rule is if | | | | or short sale 2-3 years old. |
| you had what are called "documented extenuating | | | | C. Get pre-approved 1-3 months prior to purchasing. |
| circumstances" such as death, disability, or job loss. | | | | D. Provide your bankruptcy paperwork, foreclosure, |
| Even then, lenders determine your fate on a case by | | | | and short sale documents. |
| case basis. In my experience, the most time I've seen | | | | E. If you filed a Chapter 13 Bankruptcy, provide your |
| cut off is a year. | | | | pay history to the trustee. |
| D. If you have a bankruptcy and a foreclosure, lenders | | | | F. Write a letter of explanation and provide |
| will require you to wait until your sheriff's sale/auction | | | | documentation why your bankruptcy, foreclosure, or |
| date is 3 years old. | | | | short sale occurred. |
| 2. Reestablish PERFECT credit. | | | | G. Pick at least 2 areas to look for homes. |
| A. Pay ALL your bills on time. | | | | H. Determine what your housing needs are i.e. number |
| B. Understand there is no margin for error in the | | | | of bedrooms and baths, yard and garage size, fixer |
| current credit environment. | | | | upper, etc. |
| C. Check, clean up, and raise your credit scores to | | | | I. Decide if you're going to work with a realtor or |
| 620+ preferably 740+. | | | | pursue "for sale by owner." |
| 1. Go to and see what is on your credit report. | | | | 5. Find the Right Home for You! |
| 2. Dispute errors and any accounts included in | | | | A. Negotiate a fair purchase price. |
| bankruptcy. | | | | B. Set a closing date after consulting with the sellers |
| 3. Fax in your bankruptcy schedules and discharge to | | | | and your lender. |
| the credit bureaus. | | | | C. Provide your lender current paystubs and bank |
| 4. If information about your foreclosure or short sale is | | | | statements. |
| inaccurate, fax in your foreclosure documentation. | | | | |