VA Chapter 13 Bankruptcy Buy-Out Cash-Out Refinance

Gustan Cho Associates are mortgage brokers licensed in 48 states

This blog will cover and discuss VA Chapter 13 Bankruptcy buy-out cash-out refinance. VA Chapter 13 Bankruptcy buy-out can be done through a cash-out refinance on VA home loans while on a Chapter 13 Bankruptcy repayment plan. The coronavirus pandemic outbreak in February 2020 caused many Americans financial distress.

The coronavirus outbreak has hit the economy of the United States hard. Not only did the liberal media and left-wing politicians create panic, but more importantly, politicians and the liberal media politicized the COVID-19 outbreak.

Fear-mongering was the name of the game for many state governors and politicians. Corruption soared in every level of government, from city, county, state, and federal government.  Dozens of states were ordered to be shut down. The team at Gustan Cho Associates are experts in helping homeowners with VA Chapter 13 Bankruptcy buy-outs with cash-out refinance while on a Chapter 13 repayment plan.

How The COVID-19 Scare Tactic Forced Small Business Owners To Close

Many hard-working American small business owners and employees of small businesses suffered enormous losses when they were forced to file for bankruptcy. The coronavirus outbreak created an economic, social, and political meltdown. One of the hardest-hit industries was the mortgage industry.

Many employees of mortgage companies were forced to be remote. Many brick-and-mortar lenders removed their brick-and-mortar locations and went virtual with Zoom and other technology.

It changed the entire mortgage industry. Most non-QM lenders went out of business. Two non-QM lenders suspended operations until further notice. Major mortgage guideline changes are expected on non-QM loans when they open up. Some changes will be higher credit scores, larger down payments, and lower debt-to-income ratio caps. The coronavirus pandemic has hit government and conventional loans hard.

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Many small businesses like restaurants were ordered to close by local, county, and state governments for months. Millions of Americans have filed for bankruptcy due to the government shutdowns and extended coronavirus state shutdown orders by governors. There are two types of bankruptcies: Chapter 7 and Chapter 13 Bankruptcy.

Can I Qualify For a VA Loan After Chapter 7 Bankruptcy?

Homebuyers can qualify for a VA loan after Chapter 7 Bankruptcy after meeting a two-year waiting period requirement from the discharge date of Chapter 7. You need to have been timely on all of your monthly debt payments after the Chapter 7 Bankruptcy discharge date with no late payments. Borrowers should start rebuilding and re-establishing their credit after being discharged from the Chapter 7 Bankruptcy.
Can I Qualify For a VA Loan After Chapter 7 Bankruptcy?

How Can I Do VA Chapter 13 Bankruptcy Buy-Out To End Chapter 13 Early?

How Can I Do VA Chapter 13 Bankruptcy Buy Out To End Chapter 13 Early?Mortgage borrowers can qualify for only two loan programs while in Chapter 13 Bankruptcy: FHA and VA loans. Chapter 13 Bankruptcy is a court-approved debt restructuring and repayment plan. The repayment term is three to five years, with a five-year repayment plan being more popular. Consumers who are in debt and do not have the income to pay the debt satisfactorily every month can file for Chapter 13 Bankruptcy protection.

How Soon Can You Apply For a VA Loan After Filing For Chapter 13?

Mortgage borrowers can qualify for an FHA or VA loan while in a Chapter 13 Bankruptcy repayment plan. Homebuyers and homeowners can qualify for a VA loan after 12 months of filing Chapter 13 Bankruptcy and making 12 satisfactory, timely monthly payments to the Bankruptcy Trustee. Homebuyers can apply for a home purchase loan on VA loans. Homeowners with equity can do a VA Chapter 13 Bankruptcy buy-out by doing a cash-out refinance with a VA loan.

Will Trustee Sign Off on VA Chapter 13 Bankruptcy Buy-Out?

The bankruptcy trustee must sign off on the mortgage, whether a home purchase, refinance, or a VA Chapter 13 Bankruptcy buy-out with a cash-out refinance. A common question from people who filed Chapter 13 during the coronavirus economic turmoil with state shutdowns is how soon can you apply for credit after filing Chapter 13? Mortgage borrowers can qualify for a home purchase or refinance mortgage loan while in a Chapter 13 repayment plan after 12 months from the filing date and have made 12 months of timely payments.

Can Chapter 13 Be Discharged Early?

Can Chapter 13 Be Discharged Early?Five years is a very long time to be under the jurisdiction of the U.S. Bankruptcy Courts. Your financial freedom is limited while on the Chapter 13 repayment plan. You need permission from the bankruptcy trustee for any major purchase, to buy a car, get a mortgage, and even get a few secured credit cards. One of the frequently asked questions from our clients is: can Chapter 13 be discharged early? The answer is YES.

VA Chapter 13 Bankruptcy Buy-Out Ends Chapter 13 Early

Homeowners with substantial home equity can do a VA Chapter 13 Bankruptcy buy-out through a VA cash-out refinance mortgage. VA loans allow up to a 100% loan-to-value on VA cash-out mortgage loans. With the proceeds, the homeowner can do a VA Chapter 13 Bankruptcy buy-out and get the Chapter 13 Bankruptcy discharged sooner rather than later.

Using Secured Credit Cards To Rebuild Credit During and After Bankruptcy For Mortgage Approval

The team at Gustan Cho Associates has helped thousands of clients get their credit scores to over 700 FICO within 12 months from their discharge date. Most of our borrowers at Gustan Cho Associates work with us on credit fixes and rebuilds when they get discharged from Chapter 7. There is no cost for us to help our future homebuyers after Bankruptcy. Most of our borrowers who work with us after their Chapter 7 discharge have credit scores close to 700 or higher than 700 within two years of the discharge date of their Chapter 7.  In the next paragraph, we will cover and discuss qualifying for an FHA loan during and after Chapter 13 Bankruptcy.

The Best Mortgage Lenders For VA Chapter 13 Bankruptcy Buy-Out With No Overlays

Over 95% of the lenders have changed their VA lending guidelines by imposing strict lender overlays. Most lenders now require a 640 credit score or higher. Any VA loans under 680 FICO will most likely be charged discount points. Gustan Cho Associates Mortgage Group is one of the few mortgage lenders that will approve VA loans for borrowers under 620 credit scores. This article will discuss and cover VA Loans Under 620 FICO During the Coronavirus Pandemic Crisis.

Mortgage Rates on VA Loans Under 620 FICO

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The coronavirus pandemic has shaken up the mortgage market. Mortgage rates hit a historic low. However, lenders are increasing mortgage rates for borrowers with lower credit scores. Most lenders with no or limited lender overlays have completely changed their credit score requirements. Most lenders have placed lender overlays on credit scores of 640 or higher. VA loans for borrowers under 680 FICO have skyrocketed.

Why Lenders Stopped Originating VA Loans Under 620 FICO

President Donald Trump signed the $2 trillion stimulus bill passed by the Senate and House of Representatives into law last week. Included in the bill was a law that gives unemployed homeowners the option to suspend their mortgage payments for up to 12 months. This is called a mortgage forbearance. So, any unemployed homeowner can contact their mortgage servicer and request a forbearance for up to 12 months. This will not negatively affect the borrower’s credit scores. However, the mortgage servicer still needs to pay interest and principal payments to the investor.

Best Mortgage Lenders For VA Manual Underwriting 

On top of that, the servicer needs to pay property taxes and homeowners insurance for borrowers who have escrows. The stimulus package did not include any relief for nonbank mortgage servicers. Banks such as JP Morgan Chase, Bank of America, Wells Fargo, and other FDIC banks are not seriously affected because they can borrow the principal and interest payments to investors from the Fed. Nonbank servicers cannot borrow from the Federal Reserve Board.


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