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Preparing for homeownership after a discharge...

Inquisitiveone
Established Member

Preparing for homeownership after a discharge...

Hello everyone! I just got my shiny new discharge paperwork and have already started down the road to recovery! I have obtained an unsecured card from Mission Lane Visa in the amount of $500 and I got a car loan from Global Lending services for $24K. I will say the interest rate is high @ 18% but I will be refinancing it with NFCU in 6 months. I plan on making double payments for the 6 months to show better than exceptional payment history and to bring down the balance quicker. This Jeep will be my forever Jeep so I don't mind paying it off. Now with the CC, I want to stay under 18% utilization... so I will probably just put my Netflix, Sling subscription and a few other subscriptions but stay under that amount. I have a few questions though: • There are a few programs out there for first time home ownership should I explore that now for preparation or wait? • With the credit card, when is a good time to apply for another one with a higher limit? • I really want to experience not having a car note, so after I refinance with NFCU should I wait a year (total of 18 months) and pay it off? • For the people with new homes after a chapter 7, how did you prepare for homeownership? I have no problem being patient in getting what I want, I just need good suggestions on how to go about this. I am saving as much as possible as well for my down payment. Thank you everyone in advance!
Working to get it back together!
2 REPLIES 2
jmw1
Contributor

Re: Preparing for homeownership after a discharge...

The jeep is going to hurt your DTI a lot regardless of whether it is 0% or 18% interest. Pay it down as quickly as possible. $500/month towards your downpayment fund would be a lot better than a rapidly depreciating vehicle. I would have bought a $5k-$10k beater car cash instead.  The CC you should put just one small charge on it and run through your whole household on cash/debit card.  You want to look up AZEO on this forum which is basically optimizing mortgage scores by allowing only one small balance to report on a single credit card and everything else is zero balance. You really should be 1% utilization right out of the gate from discharge. 18% is already too much after getting the gift of a fresh start.

 

The monthly subscriptions are money going out the window every single month that could be used for a down payment. The amounts may be small-ish one month, but it quickly adds up over time. I'm only on one streaming subscription paid annually and it's less than $4/month if spread out. Netflix etc. still better than cable TV, which is a huge money sink.

 

Sometimes those store cards can give you four digit credit lines a year after discharge and it will help your scores a bit, but don't use it as an excuse to increase the usage on that Mission Lane. 2 more tradelines should be enough.  There is really no reason to show more than a few dollars on each statement when it comes to a mortgage even though AZEO allows 8.9% on a single card. 

Message 2 of 3
Inquisitiveone
Established Member

Re: Preparing for homeownership after a discharge...

Thank you this was very helpful. I thought about just keeping the camry, but my son also need a car and it is high miles on it.. with my other income I can pay off the Jeep in like 6 months. I don't want any other large debt until I buy the house. I will also check out AZEO and see what that says. Thank you for the advice!
Working to get it back together!
Message 3 of 3
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