Home Purchase after Bankruptcy

Buying a Home after a Bankruptcy

Buying a home after a bankruptcy: 2 year waiting period

Millions of Americans have filed bankruptcy due to being victims of the financial and real estate crash of 2008.  Bankruptcy filings has hit historical highs.  Everyone knows of someone who has either filed bankruptcy or are in the process of filing bankruptcy.  Actually, filing bankruptcy is a great tool for someone to start their lives over again and not worry about past debt and worry about dealing with debt collectors harassing you day and night.  When someone files bankruptcy, all of their debts are eliminated and they can start rebuilding their credit.  Someone who has filed bankruptcy is eligible to buy a house in two years from the date of the bankruptcy discharge. Buying a home after bankruptcy is possible to all Americans.

2 year waiting period to qualify buying a home after a bankruptcy

Most folks who filed bankruptcy do not realize that they can qualify to buying a home and obtaining a mortgage loan in just 2 years from the date of the bankruptcy discharge.  They qualify for a FHA mortgage loan which they only need to put 3.5% down payment towards their purchase price and the balance is financed via a FHA insured mortgage loan.  For those who filed bankruptcy and are considering purchase a home in two years, they need to start rebuilding their credit and never be late on their monthly debt payments.

Re-establishing credit after bankruptcy

Mortgage lenders will expect you not to be late with any monthly debt payments such as credit card payments and automobile loan payments after your bankruptcy discharge.  Your credit scores will improve as time passes but you should also start rebuilding your credit by getting 3 secured credit cards.  Why 3 secured credit cards?  One secured credit card will improve your score, two secured credit cards will improve it better, but 3 secured credit cards will optimize and maximize your credit scores.  Have 4, 5, 6, 7 or more secured credit cards will take on the same effect as having 3 secured credit cards.  Try to have the credit limits on your secured credit cards no more than 50% balance of the credit limit and eventually reduce it down to a monthly $10 dollar balance on all three.  If you follow what I am telling you, your credit scores will improve by at least 70 to 100 points.  Never ever be late with any payments.  If you are late with one payment, you can bank that it will decrease your scores by at least 50 points if not more.

Add positive credit and re-establish credit after bankruptcy

You can also start repairing your credit by contesting the old derogatory credit items on your credit report.  This is optional because as time passes, your old negative credit items will be less of an impact on your credit scores and eventually will be automatically deleted from your credit report 7 years from the date of the bankruptcy discharge or the date of the last activity, whichever is later.  Keep in mind that a Chapter 7 bankruptcy will stay on your credit report for 10 years from the discharge date and a Chapter 13 bankruptcy will stay on your credit record for 7 years on your credit report.

Although there is a two year waiting period after filing bankruptcy to qualify for a mortgage, consult with a mortgage broker right away so you and the mortgage broker can start strategizing on a game plan on getting you qualified for a mortgage loan the date your two year waiting period is up.  Your mortgage broker will help you with repairing your credit and improving your credit scores and advise you on other important mortgage qualifying factors like how to keep your debt to income ratio in line and how to document other income like overtime income so he can use it to qualify for your new mortgage.

Related> 2015 Guidelines on mortgage after bankruptcy

Related> Credit after bankruptcy

Related> Qualifying for mortgage after bankruptcy and foreclosure

 

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

Comments are closed.