Buying a home after bankruptcy?
- Mainstream Lenders: There are only 3 ways to buying a home after a bankruptcy. First way is to qualify for a mainstream lender at best rates. In order to qualify for this you must be discharged a minimum of 2 full years and have re established credit on a minimum of 3 trade lines, counting from the date of discharge. 3 Trade lines means for example, a credit card, an auto loan, and a personal loan, or any combination. However you must we aware that secured credit cards with nominal limits do not carry as much weight as unsecured credit cards.
- Alternative Lenders: The 2nd way is to qualify for an alternative lending or mortgage solution with a lender that specializes in allowing poor credit. You could qualify 1 day after discharge however you will need to come up, depending on location, anywhere from 15 to 25% down payment. Not at easy task but allow. If an alternative mortgage solution will not work because credit might be too poor, private financing is another option.
- Private mortgage lender: The 3rd way is to qualify for private financing. Private financing may require a 20 to 25% down payment depending on location and type of property. The advantage of private lending is credit is often overlooked and the income documentation is flexible. If you have severe issues with your credit and cannot prove income easily, this option might be the solution best fitted to you.
- Fees: You will need mandatory insurance with a mainstream lender if you have less than 20% down. With an Alternative Lender it will cost you a 1% of the net amount borrowed. If you have sufficient down payment the fee could or may be capped saving you from having to pay it out-of -pocket at closing.
- Appraisal: Whenever you have 20% or more down you will require an 3rd party appraisal and is a requirement of the approval. It is recommended you factor in the time required to complete the appraisal when negotiating your financing condition clause and allow ample time for the report to be completed.
- Consultation: We recommend to consult with a mortgage professional at anytime you are considering purchasing or refinancing your home after bankruptcy. Your mortgage professional will be able to determine how best to structure your new mortgage and qualify you in the best possible way, determined by your own credit situation.
- At Real Mortgage Associates we have been serving clients with all sorts of financial and credit situations. We know how best to fit you in either a mainstream lending program, or an interim Alternative mortgage solution.
- Call or apply on line today if you buying or refinancing a home after bankruptcy