Buying a home AFTER Bankruptcy….

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Declaring Chapter 7 or Chapter 13 bankruptcy is often devastating and can turn your home buying plans upside down. Most home loan applicants think that if they have had a Bankruptcy in the past that they can never buy a home in the future and this is simply not the case. In fact, more people have prior Bankruptcies than what you might think. Filing for a Bankruptcy may be a low point in your life, but with proper preparation, patience and financial planning, you might be able to purchase a home sooner than expected. If you have had a Bankruptcy and want to purchase a home, here are the steps you need to take to get yourself in a position to purchase.

Discharge and Organize:
First things first: The bankruptcy must be discharged. If you are still in the process, it will be difficult to get a mortgage lender will speak to you.

Once your bankruptcy is discharged, organize and scrutinize your credit report. If there are debts that have been paid back but still appear on your report, contact the credit agency and have them corrected. While you’re at it, check for other mistakes on your credit report. You are entitled to one free credit report from each of the big three credit rating agencies each year—Equifax, Experian and TransUnion. If there is an error, dispute it online via the particular credit agency’s website.

Use Secured Credit Cards:
The fastest way to start rebuilding your credit score after a bankruptcy is to prove to creditors and other lenders that you can be trusted to pay back the money you owe them. You can do this by opening the right kinds of credit and managing it well.

A great place to start rebuilding your credit is by obtaining a secured credit card. A secured credit card gives you credit limited to the amount you have on deposit with the issuing bank. So, if you have $20 to $500 to place in an account with the issuing bank, then the bank will limit your credit each month to the amount of that deposit.

More Tips to Remember While Building Credit…..
Use only a small portion of your credit.
Don’t max out your credit cards and don’t apply for too much credit at one time.
Move slowly and build up your credit with on-time or even early payments.
At the end of every month, pay enough on your credit card to drop the balance down to $10.

-Pay all your bills on time and save money.
-Stay at the same job for a good length of time.
-Remove any outstanding tax liens.

Wait at Least Two Years:
Here’s where you will need patience: You should wait at least 24 months after your bankruptcy is discharged to apply for a mortgage. You may be able to get a mortgage sooner but the terms, like interest rates, won’t be as attractive as they would be if you waited two years. Since you might be paying that mortgage interest for up to 30 years, you will save money if you wait long enough after the discharge to get a good interest rate.

Finally Applying For a Mortgage:
After the two-year period, make sure you are fully prepared to apply for a loan. Your lender will want you to meet certain criteria before agreeing to lend you money: A good debt-to-income ratio, stability and time on the job. Money in the bank and no bounced checks help tremendously, of course. Any retirement plans or 401(k) assets makes your credit look good as well.

If you are seeking a home loan in the State of Georgia and would like to talk to a Loan officer about your particular situation, please call us at 770-924-1111

Your Monthly Mortgage Payment

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When you own a home, the responsibility goes deeper than just making monthly principal + interest payments to the bank. Real estate taxes and homeowners insurance are due, too.

Principal and interest payments are typically due monthly to your lender; real estate taxes are due to your local taxing authority; and homeowners insurance is due to your insurer.

Depending on how you manage these four parts, you may get a lower rate.

What Is PITI?
When a mortgage lender is trying to determine your ability to repay, one area at which it looks is your total monthly housing payment.

Your total monthly housing is calculated as follows:
•Your monthly mortgage principal payment
•Your monthly mortgage interest payment
•Your annual real estate tax bill, pro-rated to a monthly figure
•Your annual homeowners insurance bill, pro-rated to a monthly figure

Collectively, these elements — principal, interest, taxes, insurance — are known as PITI.
PITI can vary from day-to-day, and from home-to-home. This is because mortgage rates change daily, which change a home’s principal + interest payment, and because every home’s tax bill and insurance bill are different.

Many mortgage programs such as the FHA Streamline Refinance and various VA home loans require monthly pro-rated tax and insurance bills to be included within the monthly mortgage payment, a loan trait known as “escrowing” taxes and insurance.

Find Your Monthly Escrow Payment
Escrows are a part of your mortgage payment and you’ll want to know your obligation. It’s best to use a calculator because, although the math is simple, you want to make sure you get it right.

First, find your home’s real estate tax bill(s), noting that in some areas, you may receive statements from multiple different taxing authorities. Find the sum of these statements and add to it your annual hazard insurance premium.

If you are a home buyer and don’t know what your hazard insurance premium will be, estimate 1% of the purchase price. This will yield an estimate which is likely larger than your actual premium, but when building a budget, it’s often better to estimate on the high-side.
Next, divide your sum by the 12 months in a year.

These monies are paid along with the mortgage payment’s principal + interest portion.

Call your favorite Go To Guys for any questions regarding your payment or escrow! 770.924.1111

What to do with your home during divorce….

Getting out of a marriage is hard and life changing, but getting out of a mortgage (and the marital home) can be even harder. After years of co-signed loans and joint finances, separating yourselves will require a lot of patience.

Rule #1….Keep up with your bills! Seriously.
With everything going on, it’s easy for monthly mortgage payments to fall through the cracks, especially if you don’t plan on staying in the house. But in order to buy again after the divorce, it’s important to keep your credit score good, and missing payments while your name is still on the mortgage isn’t going to help.

Rule #2….Have an agreement in place of who will pay what.
This means more than just paying your mortgage. Any late bills can hurt your credit score. So make sure you have an agreement in place about who pays what.

Rule #3….Have the discussion.
If you and your spouse can have a good discussion about the house, it’s best to decide very early if you will sell or if one of you will stay. You could both stay in the house, at least until it sells and you can split the equity. However, in most cases that is impossible for obvious reasons.

If you jointly decide that one spouse will keep the house the most important factor will be whether or not one of you can afford the house on your own. In order to remove one spouse from the mortgage, you actually need to refinance, or replace your existing loan with a new one.

That means that the spouse keeping the house will need to be able to qualify on his or her own–and then keep up with the payments, with or without alimony.

Call us today with questions about what to do during this difficult time! We are here to help! 770.924.1111