Qualify for a Home Loan After Bankruptcy

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Home Loan After Bankruptcy

So you did it.  You reached a point where your debt was spiraling out of control.  Maybe you were losing sleep or maybe you were using credit to pay credit, borrowing from your 401K account, or selling your assets to leverage enough money to pay your bills.  You finally reached the end of the rope and decided to file bankruptcy.  So now you are done and you have received your discharge paperwork.  You now have a clean slate.  It has been around a year and you are back on your feet.  You decide now is the time that you want to rebuild.   The big question many people ask is,” Can I get a home loan after bankruptcy?”

Can You Get a Home Loan After Bankruptcy?

Yes, you can get a home loan after bankruptcy. Currently FHA rules require that it has been two years from the discharge date.  The banks like to see reestablished credit.  You should have a few trade lines with on-time payments.  Secured credit cards are great for this purpose.  They are easy to get and if you keep the balances low and make all of the payments on time, this will help boost your credit score tremendously. 

Home Loan 1 Year After Bankruptcy

In some cases, you may be able to get a home loan one year after a bankruptcy discharge.  If your bankruptcy included a foreclosure the waiting time will increase to three years.  FHA rules once mandated a four year waiting period after a bankruptcy discharge, however, that has been changed to two years.  With extenuating circumstances, you can qualify for a home loan one year out of bankruptcy.  You will need to demonstrate how your circumstance was extenuating and what steps you have taken to ensure that you will not have the same thing happen again. 

Extenuating Circumstance Home Loan

What is an extenuating Circumstance? An extenuating circumstance, as defined by Fannie Mae is a situation that happens once, is beyond your control, and resulted in an immediate and significant reduction in income.  Other extenuating circumstances can be an increase in financial obligations such as divorce or illness.  When applying for a home loan using extenuating circumstances, you must be prepared to provide documentation to demonstrate how a qualifying extenuating circumstance led to your bankruptcy filing.

Credit Cleanup After Bankruptcy

The first step after getting a bankruptcy discharge is to run your credit report from all three bureaus.  These are Transunion, Experian, and Equifax.  You want to be sure that all of the accounts reference the bankruptcy and that there is not a balance for any of the accounts.   You also want to be sure all of the information is accurate, such as verifying that all the accounts reporting are correct and that the balances are correct.  You want to maintain a few tradelines and make absolute sure that you are not late on any payments whatsoever.  Late payments after a bankruptcy will harm your chances of getting credit again.

 

Contact a mortgage professional today to see how you can qualify for a home loan as early as one year out of bankruptcy. Arlene Disessa is editor in chief of California-loans.com and is a mortgage banker who is knowledgeable in home loans for borrowers who have previously filed bankruptcy.  Talk to a Mortgage Loan Specialist or Mortgage Broker to see how you can qualify for a home loan today.  Contact Arlene Disessa at 530.813.0661 or email her at adisessa@rhloans.com. Arlene Disessa has worked with borrowers who have been denied mortgage loans due to employment gaps and can help you achieve your goals of home ownership.
 

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