Thanks to my son the chef, our home has been invaded by The Food Network. 
Rachael Ray, Paula Deen and Bobby Flay visit multiple times each day and when baking they never fail to mention the importance of “pre-heating” the oven.
Bankruptcy promises a “new beginning”, your old debts are discharged and you now have a clean slate. If you’re thinking of buying a home, you have to “preheat” now and not wait for two or three years to get started, because when you do take it out of the oven the finished product will taste much sweeter.
Here are some simple steps you can take starting today that will help you become a home buyer sooner and with less turbulence.
1) Request a free copy of your credit report – About 30 days after discharge of your bankruptcy, get a copy of your credit report from all three bureaus (Equifax, TransUnion, Experian). You can do this at www.annualcreditreport.com which is the only authorized source to get your free annual credit report under federal law.
2) Compare the credit report with your bankruptcy discharge papers - Unfortunately all creditors discharged in a bankruptcy aren’t diligent in reporting the correct status of your account. If the account was included in the bankruptcy, the credit report should reflect that and the balance owed should reflect ZERO.
Make multiple copies of your credit report (one for each of the bureaus and one for your records), highlight all the errors and file a dispute with each of the bureaus. You will need to include a copy of your bankruptcy papers for each bureau, so make multiple copies. This will take anywhere from 45-60 days to complete and each bureau will send you a copy of your corrected report. You’re entitled to a Free Report each year, so mark your calendar and make sure to check your report annually to be sure there won’t be any surprises.
3) Put all of your bankruptcy related forms in a safe place - You will need them when you apply for your home loan. To qualify for a home loan after bankruptcy, you have to establish that it was due to circumstances beyond your control. So in this paperwork, include anything you may have that would support your circumstances; i.e. layoff notice, medical bills, W-2s or paystubs showing a large reduction in income etc. If you had to write a hardship letter for a loan modification or short sale, include it. When in doubt, keep it! It’s much easier than trying to dig it up later.
4) Establish new credit and pay it on time! There is NO bigger dealbreaker than late payments after a bankruptcy or foreclosure. We’re in a “credit crunch” so obtaining credit after a bankruptcy is not as easy as it once was. Try a secured credit card! There are more than 49 million web pages devoted to the topic. It works like a savings account, you deposit $500 with the bank and they give you a Visa/MasterCard with a $500 limit. If you have to use it, keep the balance owed at 30% or less than the available credit (it will help your scores).
5) Open a savings account - Ability to save is an important criteria for lenders when they analyze your loan application. Having two or three thousand dollars in savings can make the difference in your home loan approval.
Current lending guidelines (FHA) require at least two years from the bankruptcy discharge date (if you can establish it was due to circumstances beyond your control). Follow these simple steps, “preheat the oven” and when you are ready to dig in, the results will be that much sweeter.
IT’S TOO IMPORTANT…DO IT RIGHT!
In case you haven’t heard, we’ve had a little bit of a “housing crisis” over the last three years and as a result first time homebuyer lenders have increased their scrutiny of loan applications.
