Afraid You Can’t Qualify For A Loan Due To A Past Bankruptcy?

Bankruptcy is a word that most people do not associate with when they think about being able to qualify for a mortgage!  When I speak to people who have a bankruptcy in their credit history, they almost always.. rather always…..say that they cannot purchase a home because of the bankruptcy and not being able to qualify for a loan.  This is not necessarily true…..it is true that if you have a bankruptcy in your credit history that special attention needs to be paid by you to your credit in order to get you back to where a lender will consider you a good risk.  If you manage your new credit history carefully and responsibly your mortgage lender can help you get the home of your dreams a lot sooner than most people believe.

What are some things you need to know about your credit history, bankruptcy and getting a mortgage……..

1. You could be qualifying for loans long before it falls off of your credit history….as soon as 1 – 2 years.

2.You can carefully rebuild your credit and get approved for loans…even a mortgage…in a year or two.

3. Yes a bankruptcy can stay on your credit report for up to 10 years, but you can start diminishing it’s effects on your credit report as soon as the day your case is closed. Adopt responsible credit habits such as paying your bills on time and not using all of your available credit. You can also apply for secured credit to help re-establish good spending and payment history.

4. You must get and use credit in order to build a good credit score. Using cash all of the time will do nothing to rebuild a good credit score. You must adopt responsible credit habits to rebuild your score.

5. Many times after your bankruptcy is closed you will find that the accounts are still showing open and overdue on your credit file.  This is not accurate and happens all of the time. You need to contact the credit bureaus to have them show those accounts as included in bankruptcy. This is very important…your credit cannot recover with these accounts still showing open and overdue. It is your credit….take an active role in its recovery.

6.Make sure to look at your credit report  at minimum once a year. Look for correct account information as well as incorrect personal information. It is important to check your address, work history and spouse information. Look for joint accounts and accounts that just do not belong to you.  All of these things can lead to incorrect information being reported on your credit file which may damage your credit score.  If you see incorrect information you can file a dispute right online at the 3 major credit bureaus.

7.Establish an emergency fund.  You may ask what does this have to do with your credit score? Well….after you build it back up this will go a long way in protecting that score if something were to happen. You need to have enough money in an emergency fund to pay your bills and rent if you become unemployed or had any other type of setback that could cost a significant amount of money. You do not want to have to depend on credit cards or loans in order to pay for life’s unexpected “stuff”.

8.Make sure to get 2 types of credit to rebuild your score quicker….. One is an installment loan, such as auto loans or school loans, the other is a Revolving account such as credit cards or home equity lines of credit.

9. As mentioned in #3…get a secured credit card. The balances on secured cards are usually equal to an amount you have deposited in an account…usually between $200-$500. Do not make the mistake of maxing out the balance on this card!! Maxing out your credit cards hurts your credit score. Use it sparingly and always pay the balance in full each month. it is not true that you need to carry a balance or pay interest in order to build credit, the credit scoring formula does not distinguish between balances that are paid off and balances that are carried over from month to month…. use your credit wisely and sparingly….your financial future will thank you!

10. Make sure when you look for a secured credit card that you do not have an application fee and your annual fee is reasonable. As well as make sure that the card you go with reports to the major credit bureaus.  Also look for one that converts to an unsecured card after 12-18 months of on time payments.

Talking to a mortgage lender who can help you understand how to rebuild your credit score and explain to you exactly what you need to do to qualify for your dream home is a step in the right direction. If you would like a referral to a local lender, please give me a call.

Resources: MSN Money

What’s in a Credit Score Anyway?

In order to qualify for a mortgage, we need to let the professionals take a look at our credit and our credit score. Before they take a look…… shouldn’t we look at our own credit? Do you know what it takes to get your credit score where it needs to be in order to have a favorable outcome from that meeting with the lender?  You need to be aware of what your credit score is before the meeting.

From time to time most of us think about, if not worry about, our credit score. So…what is it, how important is it….and how can we get it to be the best that it can be?! Here are a few facts about credit scores and how to improve them.

What is a credit score?

A credit score or FICO is a numeric expression of a persons credit file, which represents the credit worthiness of that person. A credit score is primarily based on credit report information which is usually gathered from credit bureaus.  A score is usually between 300-800.  Higher=better!

How Important is your credit score?

Your credit score tells the lender the likelihood of your paying them back the money you want to borrow…so I would say that it is VERY important…to you and the lender.

What can you do to move those numbers UP?

First off if you have had any credit problems in the past you need to be prepared to discuss them openly and honestly with your mortgage professional.  Experienced professionals know that there can be reasons behind credit issues and are ready to listen and offer any help that may make the process easier…but they cannot help if they are not aware of the problems. Make sure to talk to your mortgage professional honestly about any credit issues you have had, even if you think they are not important, let them decide. It is much better to deal with the issues before going through all of the paper work.

If you have had credit issues but have been working on them and have had on time payments for a year or longer then your credit may be satisfactory. Do not think just because you have had issues that you cannot get qualified! Ask a professional.

Excess debt can be an issue for your credit score.  Some ways to help  get rid of that excess debt quickly is to make some hard choices! You may consider selling your second car and using the money to pay off debt…or you can lower your monthly entertainment budget, maybe even get rid of it altogether for a while, and with the extra money each month pay some bills twice. Make sure to never pay just the minimum on credit cards or any kind of revolving credit.  Hold a garage sale and again….proceeds go to bills. Not just the monthly payment…more. And pay as early as possible each month so as to avoid extra interest, most companies calculate interest on a daily basis so the earlier you pay the less interest you pay.

Make sure you are not late any month! You do not want any 30 days late on your credit report.This makes a difference in calculating your score. As does your debt compared to your earnings.  Your debt ratio needs to be in balance. Make sure what you have coming in is greater than what you have going out in bills.

**There are several places on the net where you can go to get a free copy of your credit report. A simple search in your favorite search engine will produce a few sites. Take your pick and see what your score is today! If there are any problems within your report that you disagree with, do not be shy about letting the Bureaus know about it. If you go to one of the main 3 bureaus sites you can fill out online disputes and have them take a look.  It is your credit history, if you do not protect it….who will?

Have more questions about credit scores or mortgages…please call Chris today! 317 271-1700

Meet Brandon Mayo

I have been in the Real Estate business for over 16 years now, with that comes much experience. I have met many people, I have closed on many  homes and I have had the pleasure to build business relationships with many wonderful people.  Often I am asked who I recommend my clients to when they are looking for a mortgage,I have several great people and companies that I work with but today I want to talk about just one person that I have worked with for about 7 years now. I have been extremely happy with the service that my clients have received from Brandon Mayo and Union Savings Bank! I will continue to refer my clients to him in the future.

Recently Brandon and I talked and I asked him what advice he would give to a person that was interested in purchasing a home in today’s market and Brandon said “My advice would be to sit down and talk with me face to face. Understanding every fine detail without any distractions is important. Communication during the loan process is the thing that most people take for granted, but having things communicated well before you find the home you want to buy can alleviate 80% of all problems in the future. The other thing I suggest is understanding what all your expenses are in buying a home. Everyone wants the best interest rate, but often times, the closing costs can have more of an impact to your finances then the interest rate.  Education is key.

This is one reason I really enjoy working with Brandon, he is straight forward and easy to understand.

Brandon Mayo has been a resident of Avon for over 24 years having graduated from Avon High school in 1998 and going on to Kentucky Christian College and Ivy Tech. He graduated in 2001 with a Business management degree.

Brandon Mayo has been in the mortgage business for 8 years and is currently with Union Savings Bank in Avon Indiana, he has been with them since Sept 2009, previously he worked for Countrywide Home Loans for 5 years. Brandon deals strictly with Mortgages,  Brandon says that Union Savings Bank wants mortgages, US Bank believes they provide the most impact to a customer’s finances and they strive to be the best at what they do, that being mortgage origination.

If you are in need of a home and in need of a mortgage….as you can see we have you covered!

Make it a great week!

Chris Castetter

Per Brandon today’s rates at Union Savings Bank are 4.875%, But the kicker is their closing costs are only $395 for a purchase and $250 for a refinance.

“I actually rely very heavily on Chris. In many different aspects, and several not related to business or mortgages. However I would say one of the best attributes Chris has is his listening. It never fails to amaze me how his clients tell me he really listens to them. And I couldn’t agree more.  Whenever I am talking to Chris about anything, he always listens intently.” ~ Brandon Mayo June 2010If you would like to speak with Chris please contact him at 317 271-1700