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Home Loan After Bankruptcy
Hi, we have had major credit issues. We lost our home of 23 years because we thought someone was helping us refinance, but they only took money from us. Then we had to file for bankruptcy. The bankruptcy was charged off at the beginning of 2018. Right now, we are renting a home but will have to move in June 2020. Would it be possible to buy a home at that point? What can we do to help ourselves?
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I’m sorry you’ve had to go through all the struggles. This one is for you if you want to know how to purchase a home after having major credit issues, including bankruptcy.
Why is it Important to Understand Your Credit Situation / Factors?
Timeline of Bankruptcy: Your bankruptcy application was filed in 2018 and is expected to affect your credit report for nearly a decade. It shouldn’t be surprising that many mortgage companies are willing to assist clients after bankruptcy, as long as it is after a reasonable period.
Rebuilding Credit: Apart from the above, you must strive to improve your credit score while ensuring that no late payments are made towards any bills or plans, that debt is reduced, and that magnetic fresh negative marks are completely refrained from getting done.
Purchasing a House with FHA Loans
FHA Guidelines: Almost all FHA borrowers are ex-bankruptcy, and when filing for the loan, it is assumed that more time/events have elapsed since the bankruptcy was filed. During that period, good credit was maintained, and good credit can also be established with the help of a down payment. Under the right circumstances, one can secure FHA loans after two years of Chapter 7 bankruptcy.
Re-establishing Credit: Filing for Bankruptcy means you must work to prove yourself. When purchasing a house, you’ll be expected to provide evidence that you abide by the terms, which include making timely payments towards debt, earning a stable income stream, and making a down payment for some time.
Readying Oneself Financially
Outreach to a Down Payment: Be nourished with a down payment, no matter how meager, and in this way, it would increase your chances of getting a mortgage.
Increase Income: Attempt to cut down on all forms of existing debt to enhance their DTI ratio, which is one of the important parts to consider during mortgage loans.
Seek Help
Credit Counselors: Seek counsel from credit counselor agencies. They are equipped with professionals and qualified people who will assist you in improving your credits and planning your finances.
Enter the Broker: Speak with a broker, but make sure they are specifically acquainted with credit-challenged clients. They can better explain certain issues when working with you.
Know Where to Look For Houses
Look for the Various Mortgage Options Available: Agencies offering these loans do not usually restrict their requirements to FHA, VA, or USDA Home Loans; thus, you can be lenient.
Cost to Consider: Ensure that budgeting is done to see how much one can spend every month, including the cost of mortgage, tax, or even insurance.
Prepare to Relocate
When:
Since you must move by June 2020, target that date to start planning. Look for homes and their prices a few months ahead, and remember to make notes of your improvement in savings and credit scores.
Pre-approval
Before even considering house hunting, you should get a pre-approval for a mortgage. This will aid you as it shows how much you can afford and indicates to the sellers that you are a serious buyer.
There is life after repossession and bankruptcy, even though the last mortgage in a borrower’s report poses innumerable problems when applying for a new one. Many borrowers have circumstantial conditions that justify the past default. Look for ways to improve your Fico score, add additional funds for a larger down payment, and obtain professional help. Assuming you have the right tools and strategies, you can once again put yourself in the position to own a house. If you have any more questions or concerns, please ask them out loud, and You will be aided.