Can I Get a Mortgage With a Bankruptcy? - This can be summed up in one word - Yes. Agressive programs from agressive lenders makes money available for people who have filed a BK.
Sometimes minor credit repair is needed for a mortgage after bankruptcy. Often credit report balances will not reflect as zero and instead show the full amount owed prior to bankrutpcy. If you have filed a bankruptcy in the past its important to go over your credit report with a professional to make sure its completely accurate.
The type of bankruptcy that was filed will be the first determining aspect in deciding what type of mortgage financing you qualify for.
Getting a home loan after bankruptcy is not too difficult with sub-prime lenders, although the borrower should expect to pay a higher interest rate. Because of the high bankruptcy mortgage interest rates, when choosing different types of bankruptcy home loans, potential borrowers should expect to refinance the mortgages to lower interest rates after they have a chance to rebuild their credit in a couple of years.
There are many programs that allow up to 100% financing 1 day out of a bankruptcy. Of course your credit score needs to be able to support this also. Basically if you have managed to straighten out your credit since the bankruptcy it is possible to have a decent credit score by the time your bankruptcy is paid off.
Your chances for home financing will increase if you carried some accounts through the bankruptcy. Some lenders will also use your cancelled rent checks for a tradeline.
You will often want to plan a two step strategy when refinancing out of bankruptcy. Refinance once now to get your affairs in order, pay off debts, lower your overall monthly expenses, and help you rebuild your credit, and then a second refinance in two to three years to take advantage of your new credit score and any additional equity in your home you may have built or gained throug appreciation.
It is also possible to refinance while you are currently in a chapter 13 bankruptcy. You will have to get permission from the bankruptcy court and show that you have made payments into the plan on time for at least 12 months. Keep in mind that the maximum loan to value on these types of loans are typically from 70%-80% depending on the lender.
To offset some of the higher rates that you may get after filing a bk you may choose to go with a short term arm such as a 2/28 or 3/27 where the payment is fixed for 2-3 years and at that point you can come back and refinance into a program that better fits your needs.
On a chapter 7 bankruptcy lenders usually look at the discharge date and not the file date. On a chapter 13, a lender may look at the file date unless the chapter 13 has been dismissed. Your mortgage broker will be able to get the best lender for your particular situation.
A bankrupcy does not exclude you from getting a mortgage. It simply means you are a higher risk to the lender. Your rate may be higher, the fees a bit higher but the mortgage can still be obtained.
There are two schools of thought when it come to evaluating mortgage loan risk for a borrower who has had a bankruptcy. The traditional thought is that because the borrower showed a record of complete mismanagement of their obligations and had to be releived of them through the bankruptcy, they are a very high risk. A newer school of thought says that very few consumers will file two BKs within a ten year period so a borrower with a recent BK is a very low risk to go bankrupt again any time soon.
You can still get a mortgage after bankruptcy. However, try not to forget what got you in the situation to begin with. You need a great financial plan to keep you out of trouble.
After a bankruptcy you can still be considered and qualify for a mortgage. You must consult with a mortgage broker to find the best deal available for you depending on your exact situation (what type of bankruptcy was filed, how long has it been discharged, is the BK still active, what are your current credit scores, is there any re-established credit since the bankruptcy, etc...) The chance of you obtaining financing after a bankruptcy at your local bank are slim to none. A mortgage broker will have the option to search hundreds and some times thousands of lenders to find the lender who it going to be best for your situation after the bankruptcy, whereas your local bank has 1 set of guidelines that you will most likely not fit into after a bankruptcy.
Your chances will increase if you did not close out all your accounts in the bankruptcy. There are lenders that will ignore the BK if your score is 600 or higher and will even go to 100% financing. The main factor in this is established tradelines and if you closed all your accounts out in the BK you may not be able to qualify for 100% financing. You may still however be eligible for a lower amount such as 80%-90%
If you filed on mostly medical items and kept your car payments and/or credit card payments up to date your credit score may not be that bad. You may easily qualify for a home loan. The best course of action would be to pull your credit and see where you are at before you start looking at homes.
Many borrowers witha discharged Chapter 7 Bankruptcy can qualify for an FHA Loan 2 years after their discharge. Borrowers with proper documentation that an event took place outside their realm of control that caused the bankruptcy such as an auto accident, etc. with re-established credit may qualify with just 1 year out of the bankruptcy. Borrowers currently in a Chapter 13 bankruptcy may qualify for a refinance or purchase if they can document timely payments to their trustee, get permission from their trustee, and have made at least 1 year of timely housing payments.
It is possible to get a mortgage with a bankruptcy. There are many loans available for borrowers in your situation. Contact a mortgage professional and they will advise one for you.
Rebuilding your credit after bankruptcy - After your bankruptcy is discharged, your credit scores will fall dramatically. However, there are ways to rebuild credit and increase your scores. One of the best methods is to obtain a secured credit card. These cards are fairly easy to obtain and are available through most major banks. Banks will generally allow you to open a secured credit account with a minimum of $500.00.
Many people who have filed bankruptcy have had their credit restored to good levels in about 3 years. It just takes diligent financial habits and realizing what caused the bankruptcy before and not repeating those steps.
Rebuilding your credit after bankruptcy may seem like a daunting task but can be accomplished with patience. There are many companies that will lend you money after bankruptcy but at a higher rate of interest. Your job will be to make sure you pay all bills on time and to limit your use of credit. Your credit scores will eventually rise as your positive credit builds and the bankruptcy effect lessens with the passing of time.
Try working with a credit union initially after your discharge when trying to establish credit. They are easier to work with when you are trying to establish credit and its important to keep you account in good standing.
Secured credit cards will help you increase your scores. However they usually have high fees. It is important to set a goal. Are you increasing your credit to purchase another home, refinance, pull out cash? Each goal has a different approach. The use of secured credit cards and secured loans will help with adding positive tradelines on your report. Along with time and limiting the number of inquiries your credit will adjust.
The most important payment to make each month is your mortgage payment. If you have been released from a Chapter 13 bankruptcy, never miss a mortgage payment, as your lender will be able to foreclose on your property much more easily if you make late payments after the bankruptcy, and your refinance options will become extremely limited.
There are many credit card companies that offer second chance credit cards. The credit cards are unsecured, but have a very small credit limit. Usually they charge a high interest rate and large annual fees. These cards will help to rebuild your credit over time. Keep a small balance and make sure to make your payments on time. The only true secret to better credit is time. The more time that passes from the discharge date of your bankruptcy, the higher your score will go.
Usually, when you file for a personal bankruptcy, whether it is a Chapter 7 or a Chapter 13, even if you make all of your mortgage payments on time, your credit report may not reflect this.
Generally speaking, once you go into a bankruptcy, the mortgage history no longer reports accurately to the credit bureaus. It usually looks as if the payments were not made on time, even if they have been.
One way to rectify this for purposes of obtaining a mortgage is to get a VOM from the current lender, which is a Verification Of Mortgage, or payment history. Therefore, for mortgage underwriting purposes, your actual mortgage history will be used, not the inaccurate one reporting on the credit.
The other problem is that since the mortgage is no longer reporting correctly, your credit score is being negatively affected, even if your payments are now all current.
One of the best ways to rectify this is by refinancing the current mortgage and beginning fresh with a new lender. This allows the old, negative mortgage history to slowly slide to the back of the credit report, losing significance over time, and ultimately falling off the report altogether.
It is true you must obtain new credit to build up your scores. To this end, it is beneficial to re-establish 2 or 3 lines of credit (auto loan, credit card, gas card) are good examples. A good mix is two credit cards and one installment loan, such as a small personal loan from a bank or a jewelry store. Make sure each new creditor reports to ALL three credit agencies. To boost your scores each month, make sure you do not use over 45% of the credit limit, never be late, and pay off the card each month. For example, if your credit limit is $300, never allow more than $135 on the card at any time.
After your bankruptcy has been discharged you will once again begin receiving offers for credit and for re-establishing credit. Do not be tempted to try and apply for too much new credit once again. Also, don't think that you are just simply not going to use credit ever again and pay cash for everything from now on because that will only negatively affect numerous things. Credit plays too big of a part in some-one's life. Your credit is checked when applying for auto insurance, homeowners insurance, a mortgage loan, potential jobs, credit cards, auto loans, etc... If you did not re-establish credit after your bankruptcy, it will take much, much longer for your credit scores to increase and it will negatively affect your ability to buy a home again, to obtain a competitive homeowners or auto insurance premiums, to obtain quality auto loan financing, and the list goes on and on. You need credit in today's world, but you need to use it sparingly and wisely.
New Bankruptcy Laws - What They Mean to Consumers - With the new laws that went into effect in October 2005, many consumers are finding it more difficult to file Chapter 7 bankruptcy. Under the old laws, consumers could file Chapter 7 and wipe out most of their unsecured debt completely.
Under the new laws, they must first attend counseling, which helps determine if they can file Chapter 7 or Chapter 13. Most higher-income consumers will be forced to file Chapter 13, which is a debt repayment plan that doesnt wipe out the debt until the repayment plan is finished.
You can still pay off your Chapter 13 bankruptcy through a refinance. Many lenders have programs that allow you to pay off your Bankruptcy using the equity in your home.
There are some lenders who are willing to lend as soon as one day after bankruptcy has been discharged.
Speciality lenders will loan to borrowers in a Chapter 13 plan. The first test is the borrower must have paid on time to the trustee for at least six months. Some lenders want at least 12 or 18 months with no late payments. The next step is to get approval to pay off the chapter 13 plan from the trustee handling your case. The test for approval is the refinance must show a benefit over the current payment plan. If approved, the lender will need to see the trustee approval. The rest is a combination of credit score, ltv, and income with the specialty bankruptcy friendly lenders willing to lend with scores in the 500's with homes that have a high amount of equity.
Alternatives to Filing Bankruptcy - 1. Try to sell off your asset or pull your equity out of your home.
2. Consumer Credit Counseling Services (CCCS).
3. If CCCS wont take you, you may want to consider bankruptcy. Doing a Chapter 13 takes longer, but your credit is in a little better standing than if you do a Chapter 7. In the Ch 13 they give you up to 5 years to pay off your debts. The disadvantage is that youre in BK for up to 5 years plus your credit report shows your BK for 7 more years after you have finished paying off your debts.
4. If you fall behind the CH 13, then consider filing CH 7 bankruptcy. The disadvantage for this is that the bankruptcy record will stay on your credit report for 10 years and this will cause you prevented from obtaining future financing.