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Obtaining a mortgage after bankruptcy

In the past, obtaining a mortgage after filing for bankruptcy was next to impossible. It took at least somewhere between seven and ten years for a person`s credit rating to recover and even then, some lenders still took a negative view when a past bankruptcy showed up on a mortgage application. But now, with so many people struggling in the current financial climate, a bankruptcy is no longer the end of the line for someone looking for a loan.
In some instances, a person can look to apply for a mortgage in two to three years after filing for bankruptcy. However, it is important that the applicant take the time to stay on top of the situation and keep an eye on their credit score along the way. It may not be easy, but it is possible to become a homeowner despite past financial difficulties.

The Credit Score

Everyone knows that a credit score tends to make or break a person`s chances for a mortgage. Bankruptcy could have taken a nice bite out of the score, but there are ways to make improvements and show that things are getting back on track. Make sure to check the credit report offered by each of the three reporting agencies. Look through each lending instance and double check the information for accuracy. If there are any problems, have them addressed as soon as possible. Most of the time this means sending in a letter to the agency along with proof that things are different to what the report reflects.
Secured credit cards are an easy way to show the correct management of debts. It takes time, but it will show up on the credit report with positive results when used correctly. If a lender is not sure about allowing a person a mortgage, seeing a secured credit card and improvements in recent credit activity can give the applicant a better chance of success.

Starting the Application Process

About two or three years after filing for bankruptcy, a person may be ready to take the next step and apply for a mortgage. If the credit reports are accurate and there are improvements that can be seen, a lender may be more apt to go ahead with the process. Ideally, applying for an FHA or VA loan is a great start. Less money down is required and the lending requirements are often a little more manageable for someone with a tough financial background.
It is important that an applicant be able to explain what financial difficulties were faced, how they were handled and what improvements have been made. A lender is going to want some type of reassurance that they are making the right choice by going ahead with the loan.
Once the mortgage is approved, this is a great opportunity. Making the monthly payments on time means improving the credit score and making some real changes in a person`s financial future. Whether the purpose of the bankruptcy was credit card relief or dealing with medical bills and other types of loans, it is still possible to get approved for a mortgage and move into a home in the near future.

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Mortgage after bankruptcy: How soon can you buy a home? | Mortgage Rates, Mortgage News and Strategy

Mortgage after bankruptcy: Chapter 7 waiting periods

Each loan type has its own waiting period guideline after a bankruptcy. Waiting periods for a mortgage after bankruptcy are:

FHA loans: 2 years VA home loans: 2 years Conforming (Fannie Mae/Freddie Mac) mortgages: 4 years, or 2 years with extenuating circumstances USDA home loans: 3 years

To qualify for the above waiting periods, some loans require the borrower to prove “extenuating circumstances” or one-time events that caused income loss and that were outside the homeowner’s control.

In addition, the applicant must show re-established credit, meaning no major derogatory items since the bankruptcy.

Verify your mortgage eligibility after bankruptcy. (Jan 11th, 2019) Waiting periods when a bankruptcy includes home foreclosure

The foreclosure waiting period for a conforming loan is typically seven years. However, when bankruptcy includes your foreclosure, you may qualify for a shorter waiting period. The key here is knowing if your foreclosure occurred before or after your bankruptcy. Different rules apply depending on those dates.

I lost my home: Buying a home after foreclosure | Mortgage Rates, Mortgage News and Strategy

In this article:

Today, you may be wondering if buying a home after a foreclosure is possible. It is.

You will have a waiting period for prime financing You can buy sooner with private or portfolio lenders Expect to pay more if you finance soon after losing a home

Check your credit and determine what options — conventional, government, non-prime, and more — are available to you.

Verify your new rate (Jan 21st, 2019) You’re not alone

If you’ve lost your home in recent years, you’re not alone. Between 2006 and 2014, over 9.2 million Americans lost homes due to foreclosure, short sales or deeds in lieu of foreclosure. But that was then, and this is now.

It pays to find out the facts and explore your choices. If you can prove that you’ve rebounded financially, you stand a better chance of becoming a boomerang buyer.

What to expect the next time around

Prepare for a steeper climb ahead, says Rick Sharga , Executive Vice President of Carrington Mortgage Holdings.

Is it still possible to obtain a mortgage with a low credit score?

I have bad credit (score about 458) and my husband has no credit. Is it still possible to obtain a mortgage and if so, what type of documentation will I need to gather before I apply.

There is a credit crisis going on, and with a score that low, it is nearly impossible for you to get a mortgage. 458 is an extremely low score. You will need to get your score closer to 640 to have any chance at all.