Most people naturally assume that it is impossible to obtain a mortgage once bankruptcy has been filed. It is indeed a complicated process but not an impossible one. The main steps to obtaining a home loan after filing bankruptcy are; waiting, making sure that your credit accounts appear as included in the bankruptcy on your credit files, building up your credit again and keeping a steady job for at least two years.
If you are making current payments on a Chapter 13 bankruptcy you will be eligible for a FHA Loan if you have been making payments on time for over a year. If you filed a Chapter 7 you will need to wait at least 2 years after the discharge date before being eligible. Keep in mind that the filing date is different than the discharge date.
Foremost, you need to ensure that accounts included in bankruptcy appear as such on your credit reports with each of the three agencies, Equifax, Transunion and Experian. This is better than accounts showing late payments or appearing in collection or charge-off status. File a dispute with each of the three agencies and send each bureau a copy of your discharge papers stating which accounts should appear as included in the bankruptcy. Disputes can be filed via mail, phone or fax. You will need to disclose your name, address, social security number and the exact nature of your dispute. The agencies have by law 30 days to investigate the claim once they receive your documentation and will send you a corrected report once their investigation has ended.
Re-establish your credit rating is also important. If you have current accounts in good standing it will be imperative to make the timely payments. If you do not have any accounts in good standing then you might want to open a few secured credit cards. Check to make sure that the issuing bank of those secured cards report to the 3 bureaus before you apply, or else it won’t have an effect on your credit. In order to rebuild your credit, you will need to have both installment and revolving accounts which are in good standing. Revolving accounts are credit card accounts while example of installment loans are car and student loans. Do not apply for too much credit at once since too many inquiries bring your score down.
Stay at the same job for a minimum of two years and don’t change jobs right before you apply. This shows stability and an ability to pay. It is also vital to keep your employment within the same field or line or work. Keep all your check stubs and tax returns in a location that is easily accessible in case the lender wants to see them.
It may seem really difficult to obtain a home loan if you have filed bankruptcy but nothing is impossible. It is suggested that you utilize the waiting period (between a bankruptcy filing and mortgage application) to rebuild your credit, correct errors on your credit report and build a steady work history.
Written by Jacqueline Star: Refinance, San Diego New Homes
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