Qualifying For A Mortgage After Bankruptcy And Foreclosure

This ARTICLE Is About Qualifying For A Mortgage After Bankruptcy And Foreclosure

Homebuyers can qualify for a mortgage after bankruptcy and/or a housing event.

  • A housing event is a foreclosure, deed in lieu of foreclosure, short sale
  • You can qualify for a government and/or conventional loan after bankruptcy and/or foreclosure with zero percent to a maximum of a 5% down payment
  • However, government loans and conventional loans require mandatory waiting period requirements after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale
  • Gustan Cho Associates have wholesale lending partners that offer non-QM mortgages one day out of foreclosure and/or bankruptcy
  • However, 30% down payment is required on non-QM loans one day out of foreclosure and/or bankruptcy
  • The longer the bankruptcy and/or housing event seasons, the lower the down payment requirement
  • Qualifying For A Mortgage After Bankruptcy And Foreclosure is not a problem
  • However, just meeting the waiting period requirement does not guarantee an automatic mortgage loan approval
  • Lenders expect borrowers to have rebuilt and reestablished credit after bankruptcy and/or a housing event
  • No late payments after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale
  • Borrowers with late payments after bankruptcy and/or a housing event is considered as second offenders
  • Most lenders will have lender overlays on late payments after bankruptcy and/or a housing event and want nothing to do with them
  • However, one or two late payments are not always deal killers at Gustan Cho Associates
  • As long as you can get an approve/eligible per automated underwriting system (AUS), Gustan Cho Associates can do your loan
  • Gustan Cho Associates has no lender overlays on government and conventional loans.

In this ARTICLE, we will discuss and cover Qualifying For A Mortgage After Bankruptcy And Foreclosure.

Qualifying For A Mortgage After Bankruptcy And Foreclosure With No Waiting Period Requirements

Many Americans are still under the belief filing bankruptcy will be the kiss of death when it comes to qualifying for a home loan.

  • Other Americans think they can no longer get credit after bankruptcy
  • This is not true
  • Bankruptcy is a federal law where it helps Americans drowning in debt get a fresh financial start in life
  • Bankruptcy has no negative impact on loan level pricing adjustments on mortgage rates
  • Many who file bankruptcy can get a 700 credit score is less than one year after bankruptcy discharged date
  • The team at Gustan Cho Associates are experts in helping homebuyers qualify for a mortgage after bankruptcy
  • There is no waiting period requirements on qualifying for a mortgage after bankruptcy with non-QM loans
  • Last year, more than 789,222 consumers filed personal bankruptcy
  • Every one of the people who filed bankruptcy will be able to qualify for a mortgage
  • As soon as the bankruptcy is filed, consumer credit scores will drop anywhere between 100 to 200 points
  • Bankruptcy does devastate your credit score, usually causing it to fall by 200 or more points
  • However, this sudden drop is temporary
  • The team at Gustan Cho Associates have helped countless borrowers get their credit scores to over 700 FICO in just one year after bankruptcy discharged date
  • As the bankruptcy ages, it will have less of an impact on credit scores

Chapter 13 Bankruptcy remain on credit reports for 7 years. Chapter 7 Bankruptcy remains on credit report for 10 years.

Qualifying For A Mortgage After Bankruptcy: Types Of Bankruptcy

In this article, we will discuss and cover the two most popular consumer bankruptcies in the United States.

Chapter 7 and Chapter 13 Bankruptcy.

  • Every home mortgage program has a different waiting period requirements after bankruptcy in order to be eligible to qualify for a home loan
  • Non-QM mortgages one day out of bankruptcy does not have a mandatory waiting period requirement but does require a 30% down payment
  • Chapter 7 Bankruptcy is the most common type of bankruptcy among consumers
  • Chapter 7 Bankruptcy benefits borrowers without a job and/or irregular income, little to no assets, and those with unsecured debts
  • Most debts such as collections, charged-off accounts, judgments, and other unsecured debts can be discharged in Chapter 7 Bankruptcy
  • Chapter 7 Bankruptcy is discharged in 90 days from the date you file
  • Government debts such as federal tax liens, court fines, and debts incurred due to fraud are not dischargeable in bankruptcy
  • Please consult your bankruptcy attorney for more details
  • Chapter 13 Bankruptcy is for consumers with steady income and those who have assets
  • Chapter 13 Bankruptcy is called restructuring and/or reorganization bankruptcy
  • A percentage of the petitioner’s monthly income is allocated to pay creditors
  • Most Chapter 13 Bankruptcy are for a 60 month payment plan
  • After the petitioner satisfactorily makes monthly timely payments to creditors for the term of Chapter 13 Bankruptcy, the balance of the debts is discharged

Once bankruptcy is discharged, the consumer is debt free and can restart rebuilding and reestablishing their credit.

Qualifying For A Mortgage After Bankruptcy Depends On The Type Of Loan Program

Borrowers can qualify for an FHA and VA loan during Chapter 13 Bankruptcy repayment plan.

  • Chapter 13 Bankruptcy discharge does not have to be discharged
  • However, you need to be in the repayment plan for a period for at least 12 months
  • 12 months timely payments to bankruptcy trustee as well as trustee approval. Bankruptcy Trustees will sign off on a home mortgage
  • Gustan Cho Associates never had a situation where Chapter 13 Bankruptcy Trustee did not sign off on a home mortgage
  • The file needs to be manual underwriting
  • Manual underwriting guidelines apply
  • There is no waiting period after Chapter 13 Bankruptcy discharged date to qualify for an FHA and/or VA loan
  • However, if the Chapter 13 Bankruptcy has not been seasoned for at least two years, it needs to be manually underwritten
  • There is a four year waiting period after Chapter 7 Bankruptcy discharged date to qualify on conventional loans
  • There is a two year waiting period after Chapter 13 Bankruptcy discharged date to qualify on conventional loans
  • There is a four year waiting period after Chapter 13 Bankruptcy dismissal date to qualify on conventional loans
  • There is a two year waiting period after Chapter 7 Bankruptcy discharged date and three years after foreclosure, deed in lieu of foreclosure, short sale to qualify on FHA loans
  • There is a two year waiting period after Chapter 7 Bankruptcy, foreclosure, deed in lieu of foreclosure, short sale to qualify for a VA loan
  • There is a three year waiting period after Chapter 7 Bankruptcy discharged date, foreclosure, deed in lieu of foreclosure, short sale to qualify for a USDA loan
  • If you had a prior mortgage included in bankruptcy, there is a four year waiting period after bankruptcy discharged date to qualify for a conventional loan
  • The date of the foreclosure, deed in lieu of foreclosure, short sale does not matter
  • However, you cannot reaffirm your mortgage after bankruptcy

Non-QM mortgages one day out of bankruptcy and/or foreclosure has no mandatory waiting period requirement to qualify for a home loan. However, it does require a 30% down payment.

Rebuilding And Reestablishing Credit After Bankruptcy

Just passing the waiting period after bankruptcy does not automatically make you eligible to qualify for a home mortgage. You need to have reestablished credit after bankruptcy. Getting three to five secured credit cards is the easiest and fastest way of rebuilding and reestablishing credit after bankruptcy. Getting one or two installment loans will add to rebuilding and reestablishing credit after bankruptcy. You do not need to hire a credit repair service. Credit repair will often do more damage than good during the home mortgage process. Credit disputes are not allowed during the mortgage process. All non-medical non-exempt credit disputes need to be removed in order for the mortgage process to proceed. Retracting credit disputes will and can often plummet credit scores. This is because whenever consumers dispute a credit tradeline, the credit bureaus automatically negate the negative factoring from the credit scoring formula. Therefore, if consumers dispute bad credit, their credit scores will go up. This is because the credit scoring model will discount the bad credit from the credit scoring formula and the consumer credit scores will go up. However, when they retract credit disputes, the credit scores can drop down significantly because the bad credit will report back on the credit report and credit scoring formula as a new derogatory credit account. Non-medical collections are exempt from retraction. Non-medical collections with zero outstanding balance are exempt. All non-medical collection accounts that total less than $1,000 are exempt from retraction. Any credit disputes that is older than 24 months from the date of last activity are exempt from exemption of credit disputes.

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