Potential Buyers: There is Life After a Bankruptcy!

Stuff Happens!  Moving Forward from a Bankruptcy

I met with a couple today that are on the track to purchase a home this year.  Their lease is up in a few months and they wanted to get the pre-approval process started.  We met with the lender this morning and though it was disappointing that the credit union would not be able to assist them (they do not have FHA financing as an option there), these buyers are able to qualify for FHA financing.  They are fortunate that they did everything right! 

A couple of things to know about bankruptcy.

1.  It is NOT the end of the world.  It is more common than you think and we will not scold you or look down on you if you have one in your past.

2.  It will need to be 3 years after your bankruptcy discharge date before you can be approved for FHA financing.  Although a bankruptcy will be reported on your credit report for 7-10 years, it does not mean that you have to wait for it to be removed completely.

3.  In addition to the 2 years from the discharge date, you will also need to have at least 3 trade lines, in good standing with no late payments for a minimum of 12 months.  This is to insure that you are re-establishing your credit following the bankruptcy.  So if you don't have any trade lines (ie. credit cards, car loans, student loans, etc.) that are at least one year old of history, you will need to wait the 2 years plus the time that it takes to have the required trade line history.

4.  Typically, medical collections are not an issue with FHA financing guidelines.  You will need to meet the correct debt to income ratios and you will be subject to private mortgage insurance until you reach 20% equity in the property.

So don't worry if you have a bankruptcy in your past.  We are here to point you in the right direction and on the path to home ownership.  These buyers are going to meet with another lender this week that offers FHA financing options and we will get their pre-qualification started.

If you have any questions or just need some guidance on what you can do to get ready to purchase your first home after a bankruptcy, it is never too soon to start!  Call today to schedule your buyer consultation and bring all of your bankruptcy information with you.  We will get you on the track to home ownership!

Keep smiling!

Karen