Qualifying For Mortgage After Bankruptcy
For those who either filed Chapter 7 bankruptcy or are contemplating filing Chapter 7 bankruptcy to get a fresh start, you can qualify for a mortgage loan after 2 years after the day your bankruptcy has been discharged. Federal guidelines require a mandatory 2 year waiting period for a mortgage loan borrower to wait in order to get approved for a residential mortgage loan. However, just because you have passed the two year waiting period will not guarantee you a mortgage loan approval.
Getting a mortgage after bankruptcy
Most residential mortgage lenders have their own internal guidelines called overlays in qualifying a mortgage loan borrower who had a prior Chapter 7 bankruptcy. Most mortgage loan lenders do not want to see any late payments from their mortgage loan applicant after they have filed bankruptcy. They also want to see re-established credit. Most mortgage lenders require three credit tradelines with at least one year payment history. Many also require rental verification. Verification of Rent is a strong credit requirement. The only way a mortgage lender can use rental verification is by providing them a copy of 12 months cancelled checks from you. The canceled check requirement can be waived if the property owner is a property management company or you are renting your apartment or home from a licensed property management company. Then the cancelled check requirement is waived and a letter from the licensed property management company will be honored.
Overdrafts After Bankruptcy
Mortgage lenders do not want to see any bank overdrafts in the prior 12 months. In the event if you do have an overdraft in the past 12 months, you should go to your bank and get 2 months of bank statement print outs and have those print outs signed, stamped, and dated by the bank teller. Bank print outs do not reflect year to date overdraft fees and most mortgage loan underwriters will not question it.
Re-establish credit right after filing bankruptcy
You should start re-establishing your credit as soon as possible after filing bankruptcy. The easiest and fastest way of re-establishing your credit after filing bankruptcy is by getting 3 to 5 secured credit cards with $500 credit limits. Secured credit cards is a powerful tool in re-establishing your credit and improving your credit scores. Each secured credit should boost your credit scores by 20 or more points. Many people can increase their credit scores by more than 100 points just with 3 secured credit cards after filing bankruptcy.
Credit Repair Program After Bankruptcy
You can try to repair your credit after filing bankruptcy by yourself or by hiring a credit repair company. Credit repair is the process of deleting derogatory information from your credit scores. There are credit repair companies that can even remove bankruptcy from your credit report, however, the fact that you have a valid bankruptcy still remains. It may improve your credit scores and your credit report might look cleaner, but you still need to disclose the fact that you have filed bankruptcy on your mortgage application.
Credit Disputes And Mortgage Process
Credit disputes are not allowed when you are in the mortgage application process. You need to stop disputing your derogatory items six months prior to applying for a mortgage. Remember that your mortgage application will come to an abrupt halt and your file will be in suspense if the underwriter catches that you have outstanding unresolved disputes on your credit report. Removing active credit disputes can possibly lower your credit scores.
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