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  • Become a Homeowner Again Even After Bankruptcy

    May 27, 2016 | Blog
  • bankruptcy

    Many people usually view bankruptcy as an automatic ticket to financial doom. However, this is not the case; anyone can rise from the ashes of bankruptcy and rebuild their business empire to its former glory or even better levels. As a homeowner too, being declared bankrupt does not mean that you can't bounce back and buy a home again. It is possible for you to own a home again, you shouldn't write yourself off yet from the list of people who qualify for mortgages.

    The housing industry has undergone a lot of changes over the years, and it is no longer the rigid industry it used to be in the years when economic recession was at its core. In those days, it was next to impossible to qualify for a housing loan after bankruptcy or foreclosure, but nowadays it is a different scenario. Many major mortgage companies allow victims of bankruptcy and foreclosure to access mortgage loans again. They have their set of guidelines which spell out the conditions which post-bankruptcy mortgage applicants have to meet before being granted mortgages. Such conditions may include a given length of waiting period among other factors.

    Foreclosure And Bankruptcy Are Closely Tied Together

    Foreclosure is often a common cause of bankruptcy. Many homeowners are often left in a lot of debt and a state of financial despair following a foreclosure. This forces them to have no choice but to file for bankruptcy so that they be saved from the agony of repaying the large debts at a time when they are financially incapacitated.

    When a home is sold out in a foreclosure, the homeowner often still owes the mortgage provider an amount known as a deficiency. This is the monetary difference between the original value of the home and the price at which it was sold during the foreclosure. Most foreclosures usually face a lower amount in comparison to the original price of the home because of the dire conditions in which homes are sold during a foreclosure.

    If a house which was valued at $170,000 is sold at the price of $80,000 during a foreclosure, there's still an amount of $90,000 that the lender is owed by the homeowner. This is what is referred to as deficiency and what often prompts many individuals to file for bankruptcy.

    You Can Recover From Bounce Back As A Homeowner Again

    No matter how bad a financial reputation and financial dent you have suffered because of bankruptcy or foreclosure, you can recover and be a homeowner again. If you put your business skills to good use and work even harder, you can re-establish your empire and rebuild your credit score so as to be able to access major loans again. Filing for bankruptcy doesn't disqualify you from ever securing a mortgage again.

    Waiting Periods As Specified In Chapter 7

    Standard guidelines are regulating the application process of mortgage loans after bankruptcy. These guidelines spell out the waiting periods required for each kind of loan. FHA loans and VA home loans, require a period of two years to elapse before you can apply for a mortgage. Conventional mortgages and USDA home loans, however, require a waiting period of four years and three years respectively.

    Getting Loans After A Foreclosure

    It is important to keep track of the date your foreclosure or bankruptcy happened. This will help you when trying to apply for a mortgage after facing a foreclosure. The waiting period might be shorter for you if the foreclosure was completed before you filed for bankruptcy. The average waiting period required for conventional home loans the following foreclosure is seven years.

    FHA Homes Loans

    Homeowners who are applying for FHA homes loans may encounter complexities which other mortgage applicants do not go through. These include issues such as CAIVRS checks among others which don't apply to non-FHA homes loans.

    Rebuilding Your Credit Score Post-Bankruptcy

    Your credit score is one of the most important determinants of your financial success. With a low credit score, you cannot be able to even access loans and other essential credit services. Nothing is, however, more detrimental to your credit rating than going bankrupt. It puts your credit score almost at zero.

    You can bounce back and rebuild your credit score through ways such as regularly paying your bills on your credit card and application and prompt repayment of smaller loans such as personal loans and student loans. You can improve your credit rating through these ways and various other ways.