Home Buying in 30127>Question Details

CJ, Home Buyer in Powder Springs, GA

I'm looking to relocate & purchase here via creative financing, as I have a great job/income & rental histories but only 17 months out of bankruptcy.

Asked by CJ, Powder Springs, GA Wed Oct 16, 2013

Clean history now. Desire to own.

Help the community by answering this question:


Hi CJ,
FHA mortgages are the least restrictive for a previous bankruptcy. HUD requires that a minimum of 24 months must have elapsed from the DISCHARGE date of a Chapter 7 Bankruptcy before a borrower can be eligible for an FHA mortgage.

For a Chapter 13 Bankruptcy, then you must have made at least 12 on time payments. Additionally, you must also have permission to purchase from the Bankruptcy Court.

In the time since the Bankruptcy, there should be no new derogatory items such as late payments, collection accounts, liens, judgments, etc. Having late payments after a Bankruptcy is often viewed as a disregard for the importance of credit. It also reflects that you are still having financial struggles.

If a mortgage was included in the Bankruptcy, HUD requires that you must wait at least 36 months from the foreclosure date to be eligible for an FHA mortgage. Sometimes, the foreclosure happens well after the Discharge Date of the Bankruptcy. If the mortgage was not re-affirmed, there is not much that can be done until the property get foreclosed on.

Also, if the original mortgage was a government backed loan (i.e. FHA, VA, USDA), you must wait at least 36 months from the date that HUD paid the claim on the defaulted mortgage. This can sometimes be months after the original Foreclosure Date Until the 36 months on the claim has passed, you will not have a clean CAVIRS report which is required for an FHA mortgage.

Anything less than 24 months on a Chapter 7 would require an exception. To qualify, you must have experienced an "economic event," which is any occurrence beyond your control that resulted in a loss of employment, loss of income or a combination of both. The event must have caused a reduction in household income by 20% or greater that lasted at least six months or longer.

You must have recovered from the "economic event" with the re-establishment of satisfactory credit for a minimum of 12 months. You must also attend housing counseling from an approved HUD Housing Counseling Agency for a minimum of 30 days, but no more than six months, prior to submitting your loan application.

Working with a knowledgeable and seasoned loan officer is critical in today's market. Getting Pre-Qualified is the only way for you to find out your options. Once you are ready to get Pre-Qualified for your purchase, you can submit your request online at http://www.rodneymason.com to get started.

Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia with over a decade of mortgage lending experience.

Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203(k) Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle® Renovation | VA | USDA | GA Dream | Jumbo Financing.
0 votes Thank Flag Link Wed Oct 16, 2013
there are exceptions to the 24 month after bankruptcy rule . if the bankruptcy was caused by the economic downturn you might be eligible for financing now. I can refer you to a good lender that can help you figure it out .

otherwise I think I would probably advise you to rent for one year. if you look for the creative finance options you're going to have very few choices and the seller is going to dictate the price . I would not completely ruled it out but in general my advice would be to rent if you cannot make a traditional purchase today .
0 votes Thank Flag Link Wed Oct 16, 2013
I am pretty sure you are going to need to wait for 24 months to pass, depending on what type of bankruptcy was done. I would check with a local lender to be sure. Unless, of course, you have cash.
0 votes Thank Flag Link Wed Oct 16, 2013
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