Everyone falls on financial hardships from time to time, and experiencing those impactful circumstances does not permanently separate you from purchasing a home in the future. To gain a better understanding of how you can pick yourself up and dust off, here are 5 tips to help you buy a house in Riverside after a foreclosure or bankruptcy.
Budget and Save
The first step for everyone on the path to homeownership is always taking account of your financial situation and budgeting carefully.
You want to get this done right away to determine how much you can save over the coming months and years for a down payment on your new house.
Once you have all of your numbers put together, do everything you can to stick to that budget to increase your chances of successfully closing on a new property down the road. This includes trying to not make any large purchases, maintaining your current employment, and not opening or closing any bank accounts or credit cards if you can help it.
This last part sets the groundwork for our next tip.
Clean up Your Credit
Going through a foreclosure or bankruptcy creates a sizable black hole in your credit history.
Credit history is built up slowly over time and it’s going to take a while to rebuild that history in order to remove the foreclosure or bankruptcy from the memories of lenders looking into your past when you want to buy a house in Riverside.
Order your free annual credit report and go through it very thoroughly. You want to check for any errors, tabulate any debts you may or may not remember, and get everything in working order.
Bringing your budget into the equation, try siphoning a bit off from your planned savings to pay down any existing debts and slowly get your credit score turned back in the right direction.
Research Your Loan Options
An important point that homeowners that have gone through a foreclosure or bankruptcy do not learn or fail to understand is that you are unlikely to immediately turn around and buy another house without an elongated waiting period if you’re in need of a mortgage.
Most established mortgage lenders have required waiting periods of a minimum of one year up to four or more years in some cases for applicants that have undergone a foreclosure or bankruptcy. This doesn’t have to be a bad thing, though, and you should take it as an opportunity to relax from the pressures of homeownership and think your plan through.
You may find a lender that is willing to work with you right after your foreclosure or bankruptcy, but we highly advise you to go through every word of any loan documents carefully before signing on the dotted line under these circumstances.
Give Yourself a Realistic Timeline
Since you know that you could easily find yourself without a reputable mortgage lender available to you for a year or more, take a step back and think about how quickly you honestly can get your finances in order and be ready to look at the market again.
After you have your more immediate financial situation under control, there’s no reason to be rushing to the listings and possibly throwing your plan into disarray.
Don’t Cover up the Past
When discussing your past financial difficulties with agents and lenders, do not try to hide it from them.
You don’t need to bring it up yourself, but if you are asked about it, do not lie. A pointed question from a lender about your credit history that is answered dishonestly is almost a sure way to have your loan denied.
Remember that being open and honest about the changes you have made is only more likely to strengthen your application.