Mortgage After Bankruptcy And Foreclosure Guidelines

Mortgage After Bankruptcy And Foreclosure Guidelines

In this article, we will cover and discuss qualifying for a mortgage after bankruptcy and foreclosure guidelines. If there is one thing that occurred more in the last decade than in years past was the filing of bankruptcies, short sales, and foreclosures.  If you run into this type of situation, I can guarantee you that you are not alone when it comes to falling on hard times.

2008 Financial Crisis Skyrocketed Bankruptcy and Foreclosure Rates

2008 Financial Crisis Skyrocketed Bankruptcy and Foreclosure Rates
The Great Recession hit nearly everyone hard and for those who lost their jobs, saw their ARM mortgages increase, or simply couldn’t afford their home anymore there is definitely light for you at the end of the tunnel.  These things happen and if you have learned from your mistakes there is no reason why you can’t go ahead and own a home again.

Qualifying For a Mortgage After Bankruptcy

If you were part of the unfortunate group who claimed Chapter 7 or Chapter 13 Bankruptcy, sold their home through a Short Sale, or let their house get foreclosed on, your credit has surely been hit quite hard.

Timely Payments After Bankruptcy and Foreclosure is Key

Now in the months and years since this has happened, if you have worked at repairing your credit, I am sure your FICO scores have hopefully increased into the 600s or at least the upper 500s.  If this is the case, then you could be looking at the possibility of finding a loan program that can work for you and you can become a homeowner yet again by following my Mortgage After Bankruptcy And Foreclosure.

Rebuilding Your Credit After Bankruptcy and Foreclosure To Qualify For A Mortgage

Since your recent derogatory credit item has taken place, I would hope you have done all you can to put your best foot forward and work to get your credit scores increased.  You can accomplish this by making all monthly debt payments on time.

Using Secured Credit Cards To Reestablish and Rebuild Your Credit After Bankruptcy and Foreclosure

The easiest and fastest way of rebuilding your credit after bankruptcy and foreclosure are by applying for a couple of secured credit cards of at least $500 each. Each secured credit card can increase your score by 10-20 points each.

Adding On As Authorized User To A Family Member’s Credit Card Account

Adding On As Authorized User To A Family Member's Credit Card Account
You can even look to becoming an authorized user on a direct family member’s credit card which will allow all of their positive credit histories to now be on your history as well.  If you aren’t sure if you are making the right decisions, please reach out and we can work on getting you going in the right direction.

Applying For Mortgage After Bankruptcy And Foreclosure With A Lender With No Lender Overlays

Here at Loan Consultants we do our best to lend to the minimum loan guidelines no matter the product whether it be FHA, Conventional, VA, or USDA.  We are looking to do what’s right for our borrowers and we can get this accomplished by not having Lender Overlays.  If you don’t know what Lender Overlays are they are additional guidelines that need to be qualified for above and beyond the minimum guidelines as published by the loan program.

FHA Lenders With No Overlays on Mortgage After Bankruptcy

If you are looking to get an FHA Loan which we all know requires a 580 FICO and the lender you are working with is demanding at least a 620 or even 640 FICO, you need to seriously consider who you are doing business with.  If you have already gotten a denial from other lenders or if you are not comfortable with your current lender then you need to reach out to Loan Consultants at 844-275-2007. Just give us a call or text and we will be happy to assist you. Text us for a faster response. We can go over options that will work for you!

Mortgage After Chapter 7 Bankruptcy

Chapter 7 Bankruptcy: This is also called total liquidation bankruptcy because you are showing that you do not have the funds needed to pay your debts and as a result, all your debt obligations are wiped clean and you will not be forced to pay.  This may have the most significant impact on your credit scores and you are also prevented from claiming this again for at least 7 more years.

Mortgage During and After Chapter 13 Bankruptcy

Chapter 13 Bankruptcy: Chapter 13 Bankruptcy unlike Chapter 7 requires you to go on a repayment plan which is normally 36-60 months in duration.  After filing for Chapter 13, a trustee will be assigned to you who will work with your creditors to determine an income-based repayment plan you can afford.  After the repayment term is complete your remaining debt will be forgiven.

Mortgage After Short Sale

Mortgage After Short Sale
Short Sale: This is a situation where you negotiate with your current lender to allow you to sell your home for less than what is owed on it.  This was a very popular situation during the Great recession as home values drastically dropped leaving a lot of borrowers underwater on their loans.  For hard-hit areas, homes that were worth in excess of $400,000 were being allowed to go through short sales for well under $200,000.  The remaining amount owed on the home is forgiven.

Mortgage After Foreclosure

Foreclosure:

  • This occurs when you stop paying the mortgage on your home and you “walk away” from the home.
  • What fueled the Great Recession was borrowers who had their ARM mortgages adjusted.
  • The teaser rate increase significantly to an amount they couldn’t afford the mortgage payment anymore.
  • Borrowers would live in their home while not paying until the bank took back ownership of the home and they were forced to move.
  • During the Great Recession, this could mean living in your home for well over a year before you had to get out as there was an abundance of foreclosures to process.

FHA Loans After Bankruptcy And Foreclosure

One of the most lenient loan programs out there to get a Mortgage After Bankruptcy And Foreclosure has to be the FHA loan when it comes to waiting periods. Also, FHA loans are forgiving after derogatory items. Credit scores need to be a 580 FICO for a 3.5% down payment home purchase FHA loan. The FHA or Federal Housing Administration is not a mortgage lender but insures loans that are written to the guidelines that they approve.  With FHA Loans being government loans, you can normally get a very low mortgage rate when compared to a lot of other programs out there.

Waiting Period After Bankruptcy And/Or A Housing Event

In terms of a Mortgage After Bankruptcy And Foreclosure you can expect to see the following from an FHA Loan:

Chapter 7 Bankruptcy

  • 2 Year Waiting Period After Discharge Date
  • No late payments after bankruptcy
  • Reestablished and rebuilt credit after bankruptcy

Chapter 13 Bankruptcy

Chapter 13 Bankruptcy
VA and FHA loans are the only two mortgage loan programs that allow borrowers to qualify for a home mortgage during the Chapter 13 Bankruptcy repayment plan under manual underwriting.

  • Homebuyers can qualify for a mortgage during Chapter 1 Bankruptcy repayment plan via manual underwrite
  • Have at least 12 timely payments made and trustee approval.
  • No waiting period after Chapter 13 Bankruptcy discharged date
  • You can also get a loan the day after discharge of Chapter 13 Bankruptcy.
  • If the Chapter 13 Bankruptcy is not discharged for at least two years, it needs to be a manual underwrite

Mortgage After Short Sale

3 Year Waiting Period after the recorded date and execution of the Short Sale via your HUD-1 Settlement Document.

Mortgage After A Deed-In-Lieu of Foreclosure

3 Year Waiting Period after the recorded date or sheriff’s sale.

Mortgage After Foreclosure

7 Year Waiting Period after the recorded date or sheriff’s sale.

Mortgage After Bankruptcy And Foreclosure: Conventional Loan

When you are in search of your 2017 Mortgage After Bankruptcy And Foreclosure and you come across a Conventional Loan, you need to know that you can get this loan, but the guidelines are a little more strict to get your deal done.  First of all, you will need at least a 620 FICO score as well as some longer waiting periods than with FHA Loans.  However, if you are trying to take advantage of Conventional Loan qualities then this is the right place for you.

Conventional Loans After Bankruptcy and Foreclosure

Conventional Loans After Bankruptcy and Foreclosure
Chapter 7 Bankruptcy:

  • 4 Year Waiting Period after Discharge Date

Chapter 13 Bankruptcy

  • 2 Year Waiting Period after Discharge Date or 4 Year Waiting Period after Dismissal Date.
  • A Chapter 13 Dismissal is when you are not following the order of the trustee
  • Your bankruptcy is voided allowing creditors to immediately start collection actions for the debt you owe them.

Short Sale
4 Year Waiting Period after the recorded date and execution of the Short Sale via your HUD-1 Settlement Document.
Deed-In-Lieu of Foreclosure
4 Year Waiting Period after the recorded date or sheriff’s sale.
Foreclosure
7 Year Waiting Period after the recorded date or sheriff’s sale.

VA Mortgage After Bankruptcy And Foreclosure

If you are able to qualify for VA Loan then a 2017 Mortgage After Bankruptcy And Foreclosure should be a definite option for you if you know all the positives associated with VA Loans and how they are better than most loans guidelines out there.

VA Loans With Bad Credit

How VA Loans treat derogatory items may be somewhat similar to that of FHA, but there are plenty of other features that make a VA Loan the best choice if you can qualify.  VA Loans can be had with a 580 FICO score, no down payment, and 100% financing options for a loan program that has had the lowest mortgage rates for the last 3 years running.  Now in terms of a Mortgage After Bankruptcy And Foreclosure, you will need to follow these guidelines.

VA Guidelines on Waiting Period On Mortgage After Bankruptcy and Foreclosure

Chapter 7 Bankruptcy:

  • 2 Year Waiting Period After Discharge Date

Chapter 13 Bankruptcy:

  • No waiting period if you are currently up to date on your repayment plan
  • Have at least 12 timely payments made and trustee approval.
  • You can also get a loan the day after the Chapter 13 Bankruptcy discharge.

Short Sale:

  • 2 Year Waiting Period after the recorded date and execution of the Short Sale via your HUD-1 Settlement Document.

Deed-In-Lieu of Foreclosure:

  • 2 Year Waiting Period after the recorded date or sheriff’s sale.

Foreclosure:

  • 2 Year Waiting Period after the recorded date or sheriff’s sale.

Mortgage After Bankruptcy And Foreclosure Options

Mortgage After Bankruptcy And Foreclosure Options
You could possibly be overwhelmed with guidelines from this post and you still may not be 100% certain if you can qualify for a loan, well if you pick up the phone and give me a quick call we can know fairly quickly by just answering a handful of questions if you can qualify and for what program.  There are definite positive aspects to all of the loans listed and some people will prefer one program over the next and that is entirely up to them.

National Reputation of Being Able To Approve Loans Other Lenders Cannot

We just want to make sure that at Loan Consultants we are able to lend to the minimum guidelines of EVERY loan program and ensure you will not have Lender Overlays in your way of getting a loan.  Like I said earlier, we all go through hard times, but if you have bounced back and have gotten your credit in order, there is no reason you shouldn’t get a loan.  Give us a call today at 844-275-2007. Text for a faster response. Let’s get you on the path to owning a home again.

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