Bankruptcy & Foreclosure

A bankruptcy or foreclosure filing delivers a devastating blow to your credit score, but it doesn’t mean you have to wait 10 years before you can qualify for a mortgage. Many consumers who have filed for bankruptcy have been able to obtain a mortgage in as little as 2 years from the discharge and 3 years from the sheriff’s sale date in the case of a foreclosure. When it comes time to buy a home, mortgage lenders are more interested in your recovery — what you’ve done since your filing. It won’t happen over night, but here are some tips and things to keep in mind when you inquire about a mortgage with a tarnished credit past.

Give explanations

No mortgage lender is going to ignore the fact that you’ve filed bankruptcy and he or she will likely want to know the cause of the filing. Your lender will be particularly interested in whether the same situation could happen again. Your chances of being qualified are much better if your bankruptcy was caused by a single event such as a loss of employment or a death in the family, than if it was the result of “just spending too much.”  If the bankruptcy resulted from a single event, it is important to show your lender paperwork describing the incident, such as the layoff notice or death certificate. You may also want to bring in court documents to indicate when the bankruptcy was filed.

Demonstrate good money habits now

Many people who file bankruptcy swear off credit altogether, however, it is important to re-establish your credit rating. Get a secured credit card or take on some sort of loan — furniture, a car or a major appliance — to demonstrate that you are able to pay your bills on time. Make sure you are making other payments (utility bills, cell phone, etc.) on time as well. You won’t turn things around in a year but your credit score will improve over time.

Dispute any credit report errors

There’s no need to add to your troubled credit history with errors on your credit report. Get a copy of your credit report from each of the three major credit reporting agencies: annualcreditreport.com

Save your money

Lenders may be more willing to loan you money if you’ve saved up a considerable amount of money for a down payment.  Showing that you have the ability to save money is huge!

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Understanding Property Tax Increases

Notice of Assessment
Example of what a property tax re-assessment looks like in Michigan

Many home buyers have been facing a very challenging market over the past few years. The current supply of homes on the market just can’t keep up with the huge demand out there. It’s not uncommon for a home to come on the market and be sold in a matter of days after receiving multiple offers. With this fierce competition, prices have increased substantially over the last few years and has made it challenging for home buyers to find a home within the budget/payment they had planned for.  Many go over budget to get the home they want only to have another blow to that budget the following year due to the property tax increase.  This increase on the property tax portion of the mortgage payment can really hurt home owners enough to create a financial strain.

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