Tips for Buying

Credit problems can seem like an insurmountable barrier to getting a home loan. Its not an easy task, butwith patience and some insight you can turn things around. Here are four ways you can get on the road to credit repairand put yourself in a better position for homeownership.

1. Develop a budget!!!

 Stop all credit transactions right now. It might sound harsh, but you should hide or destroy all of your cards if necessary! Now you can manage your inflow of cash and, more importantly, your outflowmoney in and money out. Develop a flexible budget. Consider all necessary expenses such as housing, food, and healthcare. Then, eliminate expenses that can be trimmed such as entertainment and dining out. For more help, contact a nonprofit credit counseling agency, such as the TCA at 866/528-0588 or takechargeamerica.org. Your Realtor may also have some local help with credit repair professionals who can also help and can get it done quickly.

2. Contact your creditors!!!

 If you arent making timely payments, dont wait for your account to be turned over to collectors. Your creditors may be able to help you get on a lower-interest payment plan or agree to a settlement. A helpful tip: If your balance is unmanageable, offer a 30% settlement payment first. Some creditors will take payments of 30%-40% rather than have you default. Make sure to get the agreement in writing. Once youve paid in full, send the settlement letter to each of the credit bureaus (Equifax, Trans Union, and Experian/TRW) for reference so they will update your credit report.

3. Consolidate your debt!!!

Another approach to consider is acquiring a debt consolidation loan. This type of loan will allow you to pay off your outstanding balances with one, lower-interest monthly payment. A home equity loan for debt consolidation could allow the interest you pay to become tax-deductible.

4. Avoid bankruptcy if you can!!!

A last resort is bankruptcy because of its long-lasting effects. Bankruptcy can make it difficult to attain future credit, life insurance, and sometimes even a job. It does, however, offer a new start. The primary types of personal bankruptcy are Chapter 13 and Chapter 7. Chapter 13 allows you to keep property that you would otherwise lose, but pay off a default amount during a three-to five-year period. Chapter 7 (straight bankruptcy) liquidates all of your assets that are not exempt. Property is turned over to creditors or sold by a court-appointed official.