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Mortgage after Bankruptcy

New Contributor

Mortgage after Bankruptcy

Hello All,

 

Has anyone gotten approved for a mortgage after filing a chapter 7 bankruptcy? If so how long were you out of your chapter 7 before you were able to get pre-approved? What kind of scores did you have at the time of pre-approval?

 

I was discharged in Feb. 2011 and have been building credit since then. I have one more year left before I am able to apply. I used that first year to find credit that would approve me and now I am taking this second year to bring every thing to a 0 balance. 

 

Any type of information would be helpful.


1/1/2015 TU: 675, EP: 642, EQ: 645
TU: 638
Since:
Fingerhut $1800/ Discover It $2200/Macy's $1000/ Loft $250/ VS $250/ New York & Co $250> In Repair Mode!!!!
Message 1 of 30
29 REPLIES
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Regular Contributor

Re: Mortgage after Bankruptcy

Everything I have heard is that you have to wait 2-3 years to apply from the date of discharge for a Chapter 7.  I think it's actually closer to 3.

9/26/08 TU: 528 EQ: 558 EX: 560
11/7/08 TU:584 EQ:601 EX 600
7/21/09 TU:636 EQ:626
12/27/11 TU: 675 EQ:680
Message 2 of 30
Moderator

Re: Mortgage after Bankruptcy

Did you own property in the BK? If so, what was the disposition of that property?

This is a major factor in determining the time period for which you are eligible for a new mortgage.

Message 3 of 30
New Contributor

Re: Mortgage after Bankruptcy

No, I never had a mortgage before.


1/1/2015 TU: 675, EP: 642, EQ: 645
TU: 638
Since:
Fingerhut $1800/ Discover It $2200/Macy's $1000/ Loft $250/ VS $250/ New York & Co $250> In Repair Mode!!!!
Message 4 of 30
Moderator

Re: Mortgage after Bankruptcy


Lil_Me wrote:

No, I never had a mortgage before.



FHA is 3 yrs unless you had a hardship for your bankruptcy (serious illness, death of a primary wage earner etc), then its 2 yrs.

There have been people that have gotten a mortgage 12 months after BK, but that is highly unusual.

 

Make sure you re-establish your credit after BK. They will want to see that it is re-established with 3 active tradelines minimum. You don't have to have large tradelines at all. The underwriter will want to know what caused the bankruptcy and what steps you have taken to prevent it from occuring again.

 

Conventional loans require a longer time from discharge (can't remember now if its 5 or 7 years).

Message 5 of 30
New Contributor

Re: Mortgage after Bankruptcy

http://portal.hud.gov/hudportal/HUD?src=/federal_housing_administration

 

It's two yrs after bk7 for fha, 1 for extentuating circumstances but very hard to pull off, 3 for fha after foreclosure, and  3 and up for bk7 w conventional. 

 

We had no problems getting a fha mortgage. We got preapproved 1 3/4 yrs after our discharge (our PA letter just said we couldn't close until our 2 yr anniv) and closed a few mos after our 2 yr. Our ficos were low 700's. Keep doing what you're doing, it works!

Message 6 of 30
New Member

Re: Mortgage after Bankruptcy

FHA rules are 2 years.  Most banks say 3 years, some banks (Aimloan.com) Say 4 years.

 

Check with your bank.  But keep in mind that MOST Mortgage people, are SALESMEN first.  Read, Learn, Understand, THEN APPLY. 


Starting Score: 653
Current Score: 685!!!
Goal Score: 720


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Message 7 of 30
Moderator

Re: Mortgage after Bankruptcy

http://www.fha.com/fha_requirements_credit.cfm

 

The general BK requirements for an FHA loan are in the above link; however, individual banks/lenders can tighten up the criteria.

 

If you are in a state, like Florida, that was hit very hard by the recession, the loan criteria is more strict by the individual lenders. If you are in a state that has not been hit very hard, then your loan criteria will be closer to the minimum criteria stated by FHA.

 

The only way to know for sure is to speak with a lender in your area so you can plan appropriately.

Message 8 of 30
Established Member

Re: Mortgage after Bankruptcy


StartingOver10 wrote:

Did you own property in the BK? If so, what was the disposition of that property?

This is a major factor in determining the time period for which you are eligible for a new mortgage.


Hello StartingOver10,

Im looking for the answer to your comment here. I discharged (surrendered) my home on BK7 3 years ago and was forclosed soon after. I would like to know when can I start looking for a home. Also if you have any links to this info will be great. Thanks

Message 9 of 30
Moderator

Re: Mortgage after Bankruptcy

http://www.fha.com/fha_requirements_credit.cfm

 

When you surrender a property in BK, the bank still has to complete the foreclosure in order to wipe out the lien. Those are two different actions. The BK eliminates your personal liability to repay the loan on surrendered property (when successfully discharged from the BK); and the foreclosure eliminates the banks lien and is the actual process by which the bank gains ownership of the property.

 

The time period that begins the "clock" is the event that occurred later. If the BK discharge was after the foreclosure, then the 3 yr date starts from the discharge date. If the official bank sale date was after your discharge date, then the 3 yrs begins from that date. If you can show your BK was from extenuating circumstances, then your time period would be less than three years. It is up to the underwriters discretion. Extenuating circumstances is not "I lost my job" or "divorce" or anything of that nature.

Message 10 of 30