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!!!!
Answer: Let the bank know in advance – banks don’t hate bad credit as much as they hate unforseen surprises. If the bankruptcy was more than four years ago (two years in some programs, depending on circumstance) and you have reestablished good credit, it won’t be much of a problem. Expect the bank to annoy you by asking for a tremendous amount of documentation. Yes, VA has lower credit standards too. A bankruptcy more than two years ago is less likely to bother them.
MI>OR what courses of action should I take. ANY advice/help would be GREATLY MI>appreciated THANKS!!!!
I’ve had clients get mortgages as soon as 1 1/2 years after bankruptcy. Very few people have trouble after 4 years, unless they continue to handle debt badly. I’m in the same boat you are. Five years military and $32,000 of debt after my divorce. My debts will be discharged next month and I’m looking for a house to get started on myself. I’m looking forward to any responses your note gets.
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