VA Guidelines After Bankruptcy And Foreclosure On VA Home Loans

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VA Guidelines After Bankruptcy And Foreclosure On VA Home Loans

This BLOG On VA Guidelines After Bankruptcy And Foreclosure On VA Home Loans Was UPDATED On October 10th, 2018

What Are The New 2016 VA Guidelines After Bankruptcy And Foreclosure

Every mortgage loan program has mandatory waiting period after bankruptcy and foreclosure.

  • A bankruptcy or foreclosure or both does not deter a home buyer from buying a home and becoming a homeowner again
  • Many folks who go through a bankruptcy and foreclosure think that they are doomed and will never be able to obtain credit
  • This holds true especially to qualify for a home loan due to the massive drop of their credit scores
  • The big drop of the consumer’s credit scores after a bankruptcy or foreclosure is just temporary
  • Yes, a consumer’s credit score can plummet by more than 100 points after they file bankruptcy or have a foreclosure reported on their credit report
  • As the bankruptcy and foreclosure ages on the consumer’s credit report, the less of an impact it will have on their credit scores
  • Consumer’s credit scores will gradually increase over time
  • This still holds true even though the consumer does nothing to their credit
  • Home buyers can expedite and boost their credit scores after a bankruptcy and/or foreclosure if they start re-establishing your credit

How can you re-establish credit when your credit has plummeted over 150 FICO points after a bankruptcy and foreclosure? Read on!!!

VA Guidelines After Bankruptcy And Foreclosure And Re-Establishing Credit

As mentioned on the earlier paragraph, credit scores will definitely plummet triple digits after a bankruptcy and/or foreclosure is reported on credit report.

  • Many consumers who have a recent bankruptcy and/or foreclosure give up in getting credit
  • Many just want to pay cash for any and all of their purchases
  • They do not believe that they can re-establish their credit because of their low credit scores and the recent bankruptcy and/or foreclosure that is reporting on their credit report
  • Consumers can re-establish credit right after bankruptcy and foreclosure
  • The easiest and fastest way of re-establishing your credit after a bankruptcy and/or foreclosure is by getting 3 to 5 secured credit cards with at least a $500 to $1,000 credit limit

Using Secured Credit Cards To Boost And Re-Establish Credit

The higher the credit limit secured credit card consumers get, the stronger their credit profile will be.

  • As secured credit card ages, the stronger the credit profile will be and the higher the credit scores will be
  • I have seen people have 700 plus FICO credit scores one year after a Chapter 7 Bankruptcy, Foreclosure, Deed In Lieu Of Foreclosure, And Short Sale
  • This was done by just by getting several secured credit cards and other credit
  • Make sure that you keep your credit card balances low and always pay your minimum payments on time
  • Remember that secured credit card companies will report late payments to the three credit bureaus
  • One late payment will not just plummet consumer credit scores, but will remain on your credit report for a period of 7 years

VA Guidelines After Bankruptcy And Foreclosure On Waiting Period After Chapter 7 and 13

On this blog, we will cover the mandatory waiting period after bankruptcy for FHA Loans, Conventional Loans, and VA Loans.

  • There is a mandatory waiting period of two years to qualify for a FHA Loan after a Chapter 7 Bankruptcy discharge date
  • There is a four year mandatory waiting period to qualify for a Conventional Loan after a Chapter 7 Bankruptcy discharge date
  • There is a two year mandatory waiting period to qualify for a VA Loan after a Chapter 7 Bankruptcy discharged date
  • Waiting period is 3 years after Chapter 7 discharged date to qualify for USDA Home Loans

Borrowers can qualify for VA Loans one year into their Chapter 7 Bankruptcy Repayment Plans. There is also no waiting period after Chapter 7 Bankruptcy discharged date at Gustan Cho Associates Mortgage Group. It needs to be a manual underwrite. Over 30% of our borrowers are folks either in a Chapter 13 Bankruptcy Repayment Plan and/or recent Chapter 13 discharge who need to qualify for VA and/or FHA Loans.

How Does Bankruptcy And Housing Event Affect Mortgage Rates

Having a prior Chapter 7 Bankruptcy will not affect your mortgage interest rates on your VA Loan.

  • The only thing that will affect your mortgage interest rates on your VA Loan is your credit scores
  • VA Loans does not require any down payment so no matter whether you put zero down payment or 20% down payment, your VA mortgage interest rates will be the same
  • The reason why the loan to value does not impact VA mortgage interest rates is because VA Loans are insured by the United States Department of Veteran Affairs
  • The Department of Veterans Affairs is just like FHA Loans is insured the Federal Housing Administration
  • Conventional Loans are not insured
  • Borrowers who puts less than 20% down payment will need to get private mortgage insurance from a private mortgage insurance provider
  • With Conventional Loans, the more down payment a home buyer puts down on their home purchase, the less the mortgage interest rates are

VA Guidelines After Bankruptcy And Foreclosure On Waiting Period After Foreclosure

VA Loans only have a two year mandatory waiting period after foreclosure, deed in lieu of foreclosure, or short sale for a Veteran to qualify for a VA Loan.

  • FHA Loans require a three year waiting period for a home buyer to qualify for a FHA Loan after a foreclosure, deed in lieu of foreclosure, or short sale
  • Fannie Mae and Freddie Mac have a 7 year mandatory waiting period for borrowers to qualify for a Conventional Loan
  • Fannie Mae and Freddie Mac require a four year mandatory waiting period for a borrower to qualify for a Conventional mortgage after a deed in lieu of foreclosure and/or short sale.

If you are a Veteran and would like to see if you qualify for a VA Loan, contact us at Gustan Cho Associates

at 262-716-8151 or text us for faster response. Or email us at gcho@gustancho.com. I am available 7 days a week, evenings, weekends, and holidays to take your phone calls and answer any questions you may have on VA Loans.

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