Is this hopeless?

[Mrsg714]

I filed bankruptcy and was discharged in 2006.  I did re-establish credit, but had some lates.  One late payment was quite recent due to poor planning and having some unexpected expenses.  There really is no good excuse though and I own up to that.  I have very little credit and have maintained good payments on all of my accts except this one.  I am in the process of paying off all of my accts at the moment and will NOT make any more late payments period.  That being said, my husband and I want to purchase our first home in June 2012.  I'm not sure if this will be possible now.  My scores are: TU 589 EX 642  Hubby:  TU 642 EX 652.  I figure we can raise these scores more in the coming months.  We are looking to put down at least 3.5-5% and our monthly income is about $5100.  My husband is self-employed and will be in business for 5 years February 2012.  We are looking to purchase a house at about $140K.  Is this a lost cause?  Will we need to wait until 2016 when the BK can be removed? 

Thanks for your help

[Anonymous]

mid 2012 is still a ways off, but here is what I would say.

Any lates post BK are an issue.  If it was one time, then it can probably be overlooked by 2012.  If you have a history of lates since the BK then you may be waiting for awhile.  It is hard to tell what underwriting guidelines are going to be in 20 months or so.  Currently, my guess would be unless there was a very solid reason and it was only 1 instance, you are going to need 2 years of spotless credit and probably a bit of reserves to get an underwriter to approve.  BK alone is an issue for underwriting, any lates post BK tells the UW that even starting from a clean slate, you were unable to keep up with your expenses/habits.  Until they see a clear record fo being ahead (and by that I mean not only paying on time, but putting some reserves aside as well) they may be very leary of the file.

If I were in your shoes and wanted to be in as good shape as I could be, I would say you need to get the down payment to 5% minimum and 10% would be better.  Also, I would want to have at least a couple months of my expected mortgage payment in reserves (6 months would be ideal).  It sounds like alot, but you have to convince the UW that if something else happens that you can handle it without falling behind OR neglecting the home.

Good luck.

[Mrsg714]

Thanks for your feedback.  I am going to take your suggestions and shoot for saving up more for a downpayment and having 6 months of reserves.   I may need to push things out another 6mos to a year beyond 6/2012.  I appreciate your response.