Myth – You can’t buy a home for 7-10 years after a Chapter 7 bankruptcy.
Fact – You can buy a home with as little as 3.5% Down Payment just two years after the Chapter 7 bankruptcy is Discharged.
It‘s really pretty easy to get qualified for a FHA purchase money mortgage just two years after bankruptcy. First, you need to establish new good credit and demonstrate you are using the new credit appropriately. Next save up the down payment – Do you have family willing to help you with the Down Payment?. Now find a mortgage lender you are comfortable working with which understands the mortgage rules and bankruptcy. Finally bring a Realtor aboard to assist you in your home search.
There is understandable confusion as FHA rules do not require new credit to be established to get FHA’s blessing. Let me help clear up this confusion: FHA does not make home loans, they insure home loans so investors will make home loans. Lenders/investors have their own rules on top of the FHA insurance guarantee and they require established new good credit with much greater FICO Scores than FHA finds acceptable.
The best advise is this: as soon as you get your Chapter 7 Discharge, you need to establish and act on your personal plan to rebuild your credit.
In a future blog I will discuss how to refinance your mortgage while you are still in a Chapter 13 bankruptcy.
Many of my blogs are all about helping good folks such as you to rebuild your credit after a catastrophic credit disaster such as bankruptcy, foreclosure or short-sale.
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