Bankruptcy and purchasing home?
Question: After leaving the Army 4 years ago I had to make the hardest decision of my life. While I was in the service I accumulated ALOT of debt, and when I got out reality slapped me in the face. I had no other option than to file forkpyo, alImon tesbmself. I’ve recieved a couple of credit cards and even got an auto loan recently. I am VERY gun shy now of credit and how out-of-control itne WHich brings me to my quest ion. I would REALLY LOVE touy a house, however I don’t know what factors the mortage companies look at. Of course I’m sure they look at the obvious credit, debt to income ratios, job history, $$$ DOWN, ect…., but what can I expect if I try to apply for my 1st mortage? Is there anyone else here who has gone through the same thing? I came across a customer of mine who mentioned to me that she had filed bankruptcy, and she got an FHA mortga ge shortly after. I didn’t feecomfortableenh about my history so I left it at that. I also read somewhere abuauy that was done and the rearchers came t o the conclusion thapeople who did file where actually a lower credit risk because they usually re-establish themselves and don’t make the same mistake again. How true can this be? Now that I have started re-establishing myself, my new credit is perfect and paid on time. Been at my job for almost 4 years and aslo my wife. We make decent money, and have a low debt to income rati o. But that big “B” is my history. I also have VA benefits if that counts at all?!? WHat can I expect OR what courses of action should I take. ANY advice/help would be GREATLY appreciated THANKS!!!! Delphi Internet Services
Answer: After four years get together your your bankruptcy discharge papers any additional supporting paperwork and head out to get prequalifed by a mortgage loan officer. The key determining factor will be your credit after the DISHARGE date of your bankruptcy. You should not have any problems with a 1) 10% or more down conventional, 2) VA or 3) FHA loan.
If your discharge date is less than a year your looking at a minimum of 15% down on a very high interest rate.( i.e. 12% on a 1 year arm) Your best bet would be seller financing. Proceed carefully, there are a lot of so-called high risk lenders that are new to the business and will take advantage of you. Be sure to compare with several local lenders.
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