Buying a Home While in Bankruptcy

Did you know that it is not impossible to buy a home while in bankruptcy? I just closed a loan like this last week, and trust me when I say it was a loan most lenders would have denied! The public’s perception of the current mortgage rules is that perfect credit is required to get approved for a home loan. This is NOT the case and people with challenged credit can and should apply for a mortgage under the right circumstances.

What are the right circumstances? Mortgage guidelines look for patterns of past behavior to help predict which borrowers will make their payments and which ones will not. If you have late payments on your credit within the last 12 months your credit score most likely too low to be approved for a mortgage and underwriters will most likely not approve your loan. Issues that occured 2-3 years ago can be overlooked if you have a good explanation and can demonstrate that within the last 2 years you have established a good track record.

Let’s take a look at the bankruptcy issue. Let’s say you filed for chapter 13 bankruptcy 4 years ago and have been making steady payments each month on time. If the bankrupty court will give you permission to buy a home, your current debt to income ratio is reasonable and you have rebuilt your credit… FHA guidelines say you can be considered for a mortgage! Someone that had a chapter 7 bankruptcy will have to wait at least 2 years and must have re-established good credit.

Charlotte mortgage lenders are all slightly different on how they apply FHA guidelines. Most lenders today have overlays, which are additional requirements added to the basic FHA rules. If you have had credit issues in the past you should contract a lender directly and talk with a loan officer about your situation. Here at Fairway Independent Mortgage, we work with all the top national lenders and can find ways to get loans closed that the big banks deny.

If you would like a FREE credit pre-qualification just click here! I will be glad to help you determine what you can afford, or to create a plan for your credit to get you back on track.

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