Can I Get a Mortgage With Late Payments After Bankruptcy
In this article, we will cover qualifying for a mortgage with late payments after bankruptcy. Most consumers are under the belief that bankruptcies are the end of the world. This is absolutely not the case. Bankruptcies is a federal law that all American consumers can utilize to help them with a fresh financial start. In the following paragraphs, we will cover and discuss the mortgage options of getting a mortgage with late payments after bankruptcy.
Mortgage During Chapter 13 Bankruptcy With Out Being Discharged?
Consumers can qualify for a home mortgage after bankruptcy. Consumers under a Chapter 13 Bankruptcy Repayment Plan can qualify for a home mortgage while in a Chapter 13 Repayment. They do not have to wait until their discharge date of Chapter 13. Homebuyers can qualify for an FHA loan just 2 years after a Chapter 7 Bankruptcy discharge date. Non-QM Mortgage Lenders has non-QM loans where there is no waiting period after bankruptcy and/or foreclosure. In this article, we will discuss and cover qualifying for a mortgage with late payments after bankruptcy and foreclosure.
How Does Bankruptcies Affect Credit Scores
Bankruptcies and/or foreclosures will temporarily affect consumer credit scores. However, as time passes, consumer credit scores will gradually increase as bankruptcy ages. To boost credit scores sooner than later, consumers should get three secured credit cards after bankruptcy.
How To Rebuild Credit With Secured Credit Cards
Secured credit cards are the best tools for re-establishing credit after bankruptcy. For maximum effect, secured credit cards should have at least a $500 credit limit. The higher the limit, the more effective it is in increasing credit scores. As secured credit card ages, they will have more of a positive effect on consumer credit scores and profiles. I have seen consumer credit scores north of 700 FICO in just one year after the bankruptcy discharge date. These folks re-established their credit after bankruptcy by getting a few secured credit cards.
Bankruptcy Reporting on Credit Bureaus and How It Impacts Qualifying For Home Loans
Most derogatory credit tradelines stay on consumer credit reports for seven years from the date of the last activity. This includes late payments, collections, charged-off accounts, judgments, short sales, and other bad debt. Chapter 7 Bankruptcies stay on for 10 years on consumer credit reports.
Usually, the first six to twelve months is the time frame where bankruptcies will have the most devastating effect on credit scores. FHA and VA Loans allow borrowers to qualify for mortgages two years after filing Chapter 7 Bankruptcy. Borrowers can qualify for VA and FHA Loans one year into a Chapter 13 Bankruptcy Repayment Plan with Trustee Approval.
FHA and VA Loans After Chapter 13 Bankruptcy
There is no waiting period after the Chapter 13 Bankruptcy discharge date to qualify for VA and/or FHA loans. Lenders and creditors do not care about bankruptcies reporting on credit bureaus.
What lenders care about is timely payments and payment history after the bankruptcy discharge date.
Overlays on Late Payments After Bankruptcy
Late payments after bankruptcy are extremely bad and frowned upon by all lenders. Most lenders will have overlays on not granting any credit after late payments after bankruptcy. One or two late payments after bankruptcy are not a deal killer. However, multiple late payments after bankruptcy may require borrowers to wait two years after timely payments.
Filing Bankruptcy Due To Judgments And Federal Income Taxes
Judgments can be discharged in bankruptcy. Depending on how old federal income taxes are, they can be discharged in bankruptcy. Federal income tax or state income tax that is more than 3 years old from the due date, can be discharged in bankruptcy. This holds true only as long as the income taxes were filed timely. An example would be for 2014 income taxes that were due on April 15th, 2015, and could be discharged after April 15, 2018.
Will Income Tax Debt Stop Me From Getting a Mortgage?
Although income taxes may not be dischargeable, the penalties and interest incurred as a result of unpaid taxes may be dischargeable. Furthermore, even if an individual does not qualify for Chapter 7 Bankruptcy, assuming that taxes are dischargeable, such a person can possibly decrease their income tax liability to 10% of the amount owed.
Moreover, chapter 13 bankruptcy is a great tool that can be used to set up a payment plan with the IRS or state agency without the need to deal directly with such entities.
Waiting Period After Bankruptcy
There is a mandatory waiting period after bankruptcy on government and conventional loans. Non-QM Mortgage Lenders has no overlays on government and conforming loans. We also offer non-QM loans. There is no waiting period after bankruptcy and foreclosure with non-QM loans. Here are the mandatory waiting period requirements on loan programs:
- FHA and VA Loans require 2 year wait period after the Chapter 7 Bankruptcy discharge date.
- USDA Loans have a three-year waiting period.
- Conventional Loans require four years after the Chapter 7 bankruptcy discharge date
- NON-QM Loans do not have any waiting period requirements.
- There is no waiting period after the Chapter 13 Bankruptcy discharge date on VA and FHA loans.
How Soon After Filing Chapter 13 Bankruptcy Can I Get Approved For a Mortgage?
Borrowers can qualify for FHA and VA loans one year into the Chapter 13 Bankruptcy Repayment Plan. Bankruptcy Trustee approval is required. Chapter 13 bankruptcy does not have to be discharged.
There is a 2-year waiting period after the Chapter 13 Bankruptcy discharge date to qualify for conventional loans. The 4-year waiting period after the Chapter 13 dismissal date to qualify for conforming loans.
Home Loan Approval With Late Payments After Bankruptcy
There are no specific mortgage guidelines on late payments after bankruptcy. However, all lenders frown upon late payments after bankruptcy and foreclosure. Most lenders automatically want nothing to do with borrowers with late payments after bankruptcy and/or housing event. This holds true even though borrowers have an approve/eligible per automated underwriting system approval. Non-QM Mortgage Lenders has non-QM and alternative mortgage loan options for borrowers with late payments after bankruptcy.
How Can I Get Approved For a Mortgage With Late Payments After Bankruptcy
The team at Non-QM Mortgage Lenders are experts in helping borrowers get approved with late payments after bankruptcy. In the event borrowers cannot get an approve/eligible per the automated underwriting system, we have dozens of non-QM mortgage loan options. The good news is that Non-QM Mortgage Lenders accepts borrowers with late payments after bankruptcy and/or housing event if they get approve/eligible per the automated underwriting system.
