Bankruptcies can sometimes not be avoided, depending on what happens in your life. I am not here to judge you at all. My job is to help you understand your current position and to help you with any future considerations when it comes to your financing options.
What I want to cover is if you have already gone through a Chapter 13 or 7 bankruptcy. So many people that did fall on hard times sometimes think that their lives are over with. This is not always the case, hence why you need to speak to a mortgage professional. One option might be FHA financing.
2 FHA facts : (there a few times when a FHA loan can be secured less than the time mentioned below -Please speak to your loan officer about these)
- CH. 7 has to be 2 years old from date of discharge.
- CH. 13 has to be 1 year old with proof of payments on time. You also need to obtain a letter from the bankruptcy trustee allowing you to move forward with this financial decision.
Some key things to remember if thinking about buying a home or refinancing :
- As stated before, things do happen and can happen. Make sure that you write a very good letter of explanation. We sometimes call this a "cry" letter. You want to give good reason(s) why you had to take the road of a bankruptcy. Some good examples are loss of a family member, loss of job, or some sort of emergency that left you with $1,000's of dollars of hospital bills. And sometimes these can be reasons that supersede the guidelines to as when you can get a loan depending on the time of your bankruptcy. You want to write details, being specific. Showing any proof in regards to bills, death certificates, or anything else that can prove what took place.
- Pay your bills on time. Once you have a bankruptcy, the lender usually wants to see re-established credit with no lates after the bankruptcy. Again, you might be allowed to have a few lates, depending on the circumstances. I hate to say this, but if anything, pay your mortgage first. This might be the deciding factor on some types of mortgages.
- Save everything..... Keep all bankruptcy papers, anything from the courts, lawyers, or the trustee. It can sometimes take a few weeks to obtain this information, which could delay your settlement date.
- If you are currently in your home and you had a Ch. 13, you might be able to buyout your bankruptcy with a new refinance. This could drastically lower your payments. Again, speak to a FHA Expert on this.
Keep in mind that there are many programs out there, depending on your needs. There are other mortgage programs depending on your credit scores that allow for less time on your bankruptcy. These programs will usually require higher credit scores.
FHA does not have FICO score (credit score) requirements. Consult a professional on these matters.
***DISCLAIMER -- I am not a bankruptcy attorney. I am supplying information for those that have already filed for a bankruptcy, currently making payments, or have already been discharged from a bankruptcy. And if you are in financial difficulties and are thinking about the possibility of filing for a bankruptcy, please seek the advice of a professional bankruptcy attorney.***
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