Buying House After Bankruptcy Mortgage Guidelines
Millions of Americans fell victim to the real estate and banking collapse of 2008. A large percentage of them filed for bankruptcy. Still, others went through foreclosures, deed-in-lieu of foreclosure, or short sales. Bankruptcy filings soared like never in history. This economic collapse really hit home
I know hundreds of people who have lost their homes and everything they have worked so hard for, including their credit scores, and filed for bankruptcy. Many lost their homes because they lost their jobs or businesses. Entire industries have almost become extinct. In this article, we will discuss and cover the mortgage guidelines to qualify for a mortgage for buying house after bankruptcy.
Mortgage and Banking Collapse after Housing Bubble Burst
The banking and mortgage industry has suffered tremendously. Small neighborhood banks have shut their doors. Or have been acquired by larger banks like Chase and Bank of America. Big banks like Chase, Wells Fargo, Bank of America, and Citibank could have collapsed if the government did not bail them out. The big three automakers almost shut their doors. They needed the federal government to bail them out, except for Ford Motors. Countless workers in the auto industry lost their jobs, pensions, and homes.
Real Estate And Mortgage Industry Collapse
Half of the realtors went out of business or found other work. Half the mortgage loan originators had to leave the banking and mortgage industry due to a major restructuring of the mortgage business. Construction companies went out of business, and millions in the construction industry, such as architects, engineers, electricians, plumbers, roofers, masons, and carpenters, became unemployed for years. New mortgage regulations were implemented and the SAFE ACT and DODD-FRANK were created. New laws and regulations for buying house after bankruptcy was implemented on government and conventional loans.
Life After Bankruptcy & Recovery
In my opinion, it was not the recession of 2008 but more like the Depression of 2008. Never in my life did I ever think that the value of real estate could plummet as it did, and never in my wildest dreams could I have predicted the banking and credit collapse of 2008. I lost all my net worth and know hundreds of others with the same misfortune. I am young enough to start my life over again and rebuild, but those elderly folks, my parents, are living their golden years with financial stress.
Most people’s life savings is the equity in their homes. Due to the financial collapse of 2008, many Americans have lost all that. The housing market has recovered, and homeowners with underwater mortgages or negative home equity have now recovered.
Underwater mortgages or negative equity is when the mortgage balance is higher than the value of the home. Homeowners with underwater mortgages thought they could never sell their homes. This was due to the negative equity, but real estate values have appreciated throughout the U.S.
Buying House after Bankruptcy and Foreclosure
Having bad credit was somewhat of a taboo before 2008 but not anymore. Bankruptcy is a federal law that helps consumers help in either discharging their debts or getting a fresh start in life. Or the courts help consumers with time in restructuring their debts. The economic downturn has left many hard-working Americans no choice but to go through bankruptcies, foreclosures, short sales, deed-in-lieu of foreclosures, judgments, and charge-offs.
The depression of 2008 has affected a large percentage of Americans.. Those who have recovered can now consider buying house after bankruptcy and foreclosure. The good news is that there is life after bankruptcy, foreclosure, judgments, and other bad credit victims. Folks can now qualify for home loans with bad credit and buying house after bankruptcy.
Anyone can qualify for a mortgage after bankruptcy. This holds true as long as they wait two years and have rebuilt their credit with an FHA loan. Conventional Loans have a longer waiting four years after Chapter 7 to qualify. The waiting period to qualify for FHA loans after a foreclosure is three years. Borrowers can also qualify for a mortgage with a civil judgment if they have a written payment agreement. We will discuss how to qualify for a home loan with a judgment in later blogs.
Qualifying and Buying House after Bankruptcy
There is no need to worry for borrowers who have credit problems due to declaring bankruptcy or foreclosing on a home, or if your credit scores have dropped because of late payments or failure to pay. Buying house after bankruptcy and foreclosure is not as difficult as many think.
Although a good credit score can drop very quickly, at times taking a hit of as much as 150 points or more, it is possible to improve credit over time to qualify for a new mortgage loan.
Boosting credit scores is not the only means for people with bad credit to get a home loan. To promote homeownership, the Federal Housing Administration (FHA) has made it easier to buy a house after bankruptcy and foreclosure by meeting a certain waiting period.
Buying House After Bankruptcy And Bad Credit
- Loss of employment
- Loss of business
- Illness
- Divorce
- Other extenuating circumstances
How To Rebuild Credit For Buying House After Bankruptcy
Buying House after Bankruptcy With FHA Loans
The 2-year waiting period after a Chapter 7 Bankruptcy discharge date. Borrowers can qualify for a one-year FHA loan in a repayment plan on a Chapter 13 Bankruptcy without being discharged. There is no waiting period after a Chapter 13 Bankruptcy discharge date to qualify for an FHA loan. Lenders do not want borrowers to have any late payments after bankruptcy or foreclosure. The above requirements are the same for VA and USDA loans.
Buying House after Bankruptcy With Conventional Loans
Fannie Mae and Freddie Mac are government-sponsored enterprises ( GSE ) that set Conventional loan guidelines. Here are the mortgage guidelines for buying house after bankruptcy with Conventional loans. Four-year waiting period after a Chapter 7 Bankruptcy discharge date. The two-year waiting period after a Chapter 13 Bankruptcy discharge date. Four-year waiting period from the discharged date of the Chapter 7 Bankruptcy if the borrower had mortgage part of Chapter 7 Bankruptcy. The foreclosure or short sale must be finalized for the borrower to qualify for Conventional loans.
Buying House after Bankruptcy and Foreclosure With No Waiting Period With NON-QM Loans
NON-QM loans are portfolios with no waiting period requirements after bankruptcy and foreclosure. How NON-QM loans work, there is no waiting period after bankruptcy and foreclosure. The minimum down payment is between 10% to 20%. Bank Statement Loan Programs are available. No Doc Fix And Flip Loans. No Doc Investment Property Loans for real estate investors. Non-Qm Mortgage Lenders have no overlays on government and conventional loans. We go off the automated findings from Fannie Mae and/or Freddie Mac’s Automated Underwriting System. Over 80% of our borrowers are folks who could not qualify elsewhere or are going through a stressful mortgage process. Borrowers who need a lender with no lender overlays and who is available seven days a week, contact Non-Qm Mortgage Lenders at 800-900-8569 or text for faster response. Or email us at gcho@gustancho.com.
