How to Secure a Mortgage After Bankruptcy
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Suffering bankruptcy is not a death blow to your dreams of owning a home. It will make those dreams a little more difficult to achieve, but there are many systems in place to ensure that you can bounce back from a period of bankruptcy. Like all things worth having, recovering from bankruptcy to secure a mortgage takes patience and hard work, and we can help you find your way.
Transcript of How to Secure a Mortgage After Bankruptcy
State Licensing Information.
Balancing BankruptcyUnlike in years past, suffering bankruptcy is not a death blow to your dreams of owning a home. It will make those dreams a little more difficult to achieve, but there are many systems in place to ensure that you can bounce back from a period of bankruptcy.
Like all things worth having, recovering from bankruptcy to secure a mortgage takes patience and hard work, and we can help you find your way.
State Licensing Information.
Types of BankruptcyIf you’ve declared bankruptcy, you probably know there are different types of personal bankruptcy, but each comes with different waiting periods for financing. First, we’ll break down the types of bankruptcy, and their impact on financing.
Chapter 7 BankruptcyChapter 7 is generally the most common form of personal bankruptcy. Your assets are sold to pay creditors, and you are freed from debts.
Chapter 13 BankruptcyChapter 13 bankruptcy is typically for people who still have an income and can repay some debt over 3-5 years.
View the latest loan changes for bankruptcy here: FannieMae 08/16/14
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The Right LoanNew American Funding can always help buyers find the right loan, but buyers in bankruptcy must be aware of the additional factors in their purchase decision.
The waiting – or seasoning – periods we discussed previously are the biggest roadblock to securing financing, but they exist to protect both you and your lender. For VA loans and FHA loans – backed by the government and with low interest rates – the waiting periods are less stringent, but your lender may insist upon additional seasoning. You’ll also need to provide an explanation of the bankruptcy.
The seasoning period can be difficult, but it also provides you time to get your financial house in order and to save up a for a down payment. No matter which loan you choose, the first step to getting approved is to rehabilitate your credit.
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Rebuilding Your CreditYour credit score is one of the most important factors in securing any type of financing, but that is especially true for mortgages. Luckily, your credit score will increase as your credit improves, even from the day you start bankruptcy.
Rebuilding your credit and saving money are the most difficult parts of bouncing back from bankruptcy, but here are some important steps.
• Apply for credit cards soon after bankruptcy and use them responsibly, ensuring that you make prompt payments.
• Finance larger purchases when possible, but make sure you can handle all payments.
• If you have bankruptcy payments, always pay them on time and in full.• Wait for the full waiting period to expire. While you can often apply for an
FHA loan before your seasoning period ends, your rates and terms will be much tougher.
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Set Reasonable ExpectationsThe stark truth is that it will be more difficult – but not impossible – to secure home financing after a bankruptcy. Bidding Tip: The first step in knowing what you wantis to know what you can afford. Thatmeans getting pre-approved for a loan.Knowing your limits allows you to makean offer with the expectation of a bidfrom another buyer. Check out5 Things You Need to Be Pre-Approved.
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How to Get a MortgageAfter Bankruptcy
Learn More About Home Financingand First-Time Homebuyer Programs
www.NewAmericanFunding.com
