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Discharge and Organize

First things first: The bankruptcy must be discharged and your case closed. If you are still in the process, or if you are still in credit counseling or any other program that takes over your finances, no mortgage lender will speak to you. 

Once your bankruptcy case is discharged and closed, 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 are at it, check for other mistakes on your credit report. You are entitled to one 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 and Installments Loans
The fastest way to start rebuilding your credit score after a bankruptcy is to prove to creditors and other lenders that you can be again trusted to pay back, that the bankruptcy allowed you a fresh start on your finances. You can do this in two ways: secured credit cards and installment loans.
A secured credit card gives you credit limited to the amount you have 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 the deposit.
An installment loan is simple one where you make installment payments each month.  It can be a personal loan, car loan, or student loan.  If you get an installment loan, then you only need to do one thing: make your monthly payment ON TIME.
More Tips to Remember While Building your Credit.
     . Use a small portion of your credit line.  Do not max out your credit cards and do not         
       apply for too much credit at one time.
     . Move slowly and build up your credit with one-time or even early payments.
     . Three open trades with a twelve months of on time payment history is recommended.
     . Save money
     . Stay at the same job for a good length of time; two or more years
     . Remove any outstanding tax liens and work a payment plan with any student loans.
Wait at Least Two Years
Here is where you will need patience: Filing for bankruptcy will not prevent you from ever obtaining a mortgage loan; however, you will not be able to get one immediately. Obtaining mortgage financing depends upon the type of loan  you want, the type of bankruptcy you filed, and your re-established credit history.
     FHA loans and VA Loans: To obtain and FHA loan or a VA loan after Chapter 7; you must wait two years from the date your Chapter 7 is discharged. You can obtain an FHA loan during a Chapter 13 bankruptcy as long as you have made 12 months of satisfactory Chapter 13 plan payments, but you must have bankruptcy court approval to get the loan. In both cases you must provide the mortgage lender with an explanation of the bankruptcy.
     Conventional Loans: Conventional loans have the longest waiting periods. You must wait four years after receiving a Chapter 7 discharge and two years after receiving a Chapter 13 discharge.  If your Chapter 13 case was dismissed without a discharge, you must wait four years from the date of the dismissal.
After the two year-year period, make sure you are fully prepared to apply for a loan with a good debt-to-income ratio, stability and time on the job, money in the bank. A big down payment and retirement plans or 401K assets carry a lot of weight.  Keep that in mind during the two year waiting period and save as much as you can.

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DreamHouse Real Estate
2150 S Garfield Ave Suite A • Monterey Park, CA 91754
Office (323) 888-1819 • Fax (323) 722-9079
Cell (818) 383-8048