It has happened to many Americans the last handful of years. Job loss, over extension of credit, death, or any number of reasons why a major event causes your credit to be severely hampered. So how do you prepare to reenter the credit market to buy a home after one of these events happen.

1) Time– Bankruptcies and foreclosures are considered separate occurrences. Typically speaking for an FHA loan, you need 2 years from discharge. Short sales and foreclosures require 3 years. Now these are the typical times, major documentable extenuating circumstances can allow for these to change (ask your lender).

2) Credit– The worse thing you can do after a bankruptcy is to become a cash buyer. You must have reestablished your credit and shown no hiccups since the life event. The best thing to do is have reestablished credit right away (pick yourself up by the boot straps).

3) Proof of rent– Lenders are more carefully checking client’s ability to repay. Meaning do you have a history of making these kind of housing payments. Track all your rent payments , pay with checks, and get receipts from your landlord.

4) Down payment/ savings -There is a definite need to also show you have some money socked away for a rainy day. So aside from the down payment, make sure you have a good few mortgage payments worth of savings in case of cloudy days ahead.

5) Be Organized– Do you have the entire bankruptcy package? Do you have your Public Trustees Deed from the foreclosure? Do you have the settlement statement from the short sale? Do you have all the paperwork handy?

These are some basic things to do. I have helped many people qualify for mortgages after all of these life events (short sales, foreclosures, bankruptcies). The one consistent thing with those who have the most success, is they were resilient , they reestablished their credit, they bought within their means the second time around, and they had their paperwork organized from the life event.

Best~

Ray Williams

Branch Manager

Summit Mortgage Corporation