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Buying a Home after Filing for Bankruptcy - The Rules

By
Real Estate Broker/Owner with Grants Pass, OR 199909023

Buying a Home after Filing for BankruptcyBuying a Home after Filing for Bankruptcy - The Rules.  A common question comes to mind for those folks who are thinking about filing for bankruptcy, or already have... "When can I purchase a home (or refinance) after filing for Bankruptcy?"  Here are some basic qualification guidelines for various types of mortgage loans:

Conventional loans -
If purchasing, after 4 years with a 680 credit score or higher.  The bankruptcy will no longer count against you after 7 years.  However, if you show delinquencies after a bankruptcy, you will mostly likely be considered in a higher risk category and could possibly still be denied a loan.

If refinancing, you can refinance as a rate and term after a minimum of 4 years, but no cash out is allowed.  Rate & term refers to mortgage liens such as a first mortgage, second mortgage (if used to purchase the home) and property tax liens. 

USDA Zero Down -
After 3 years

VA -
After 1 year, if extenuating circumstances has occurred such as loss of employment or a medical issue, otherwise, after 2 years.

FHA -
After 1 year, if extenuating circumstances has occurred such as a death of a wage earner or a serious illness, otherwise, after 2 years with no delinquencies since the bankruptcy.

A bankruptcy will remain on your credit report for 10 years after discharge date.

Information provided by Ambient Home Lending ~ Southern Oregon

Posted by

Mel Peterson

 Melinda Peterson, ABR, CRS

 Oregon Principal Broker

 Real Estate Cafe LLC

 541-659-1620

 TheOregonDream.com

 

 

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Debra Leisek
Bay Realty,Inc Homer Alaska - Homer, AK

Good information and nicely written... thanks for a great presentation...

Jan 12, 2010 06:05 PM
Kim Dove
Watson Realty Corp - Jacksonville, FL
Realtor - Jacksonville FL

Very good blog post. This is certainly worth bookmarking.

This will become a real issue in the next couple of years for homeowners that have had to file bankruptcy after the deficiency judgement from foreclosure.

Jan 12, 2010 06:10 PM
Frank Rubi
Frank Rubi Real Estate, LLC - Metairie, LA
FrankRubiRealEstate.com

Melinda, I don't have anyone in that boat as we speak but it is good to know information. Thanks.

Jan 12, 2010 06:37 PM
Jim Hale
ACTIONAGENTS.NET - Eugene, OR
Eugene Oregon's Best Home Search Website

Great summary, Melinda.  Bankruptcy does not hurt as bad in this respect as it does in terms of assets and reputation.

Jan 12, 2010 06:42 PM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

The time following the discharge is important.  However, the buyer had better NOT have and delinquincies on their credit report following discharge.

Jan 12, 2010 08:20 PM
Rob Thomas
Prestige Homes of The Tri Cities, Inc. CALL....423-341-6954 - Bristol, TN
Bristol TN-VA & Tri Cities Agent, ABR, GRI, e-Pro

Melinda....thanks for the information. I didn't know about the changes. Have a great day!

Jan 12, 2010 09:57 PM
Roy Kelley
Retired - Gaithersburg, MD

Thanks for sharing. Important information for those that are considering bankruptcy. We get calls all the time from people with recent discharges that think they can obtain immediate financing.

Jan 12, 2010 10:00 PM
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

Great information, Melinda.  I had someone call me the other day about purchasing a property after a bankruptcy.  I referred her to a lender.

Jan 13, 2010 11:31 AM