Home Buying in Atlanta>Question Details

Begood, Renter in Atlanta, GA

What are the requirements for buying a home? I have filed bankruptcy within the last year.

Asked by Begood, Atlanta, GA Tue Jan 18, 2011

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Answers

53
Hi Begood!

This is one of those questions to which there are lots of answers, depending on who you ask. Here is an article on this subject

http://www.financialnewsline.com/mortgage/how-bankruptcy-aff…

The basic rule of thumb is 3 years for conventional and 2 years for FHA. FHA stands for Federal Housing Administration, and they are the government backed loans. You still need to qualify for them but the down payment is only 3.5%

Conventional is basically a standard loan but typically requires 5% to 10% down.

The big issue for you is re-establishing credit. I'm going to outline what you need to do:

The first step is to make sure all of your included creditors were included in the BK on your credit report. This is going to be tedious but necessary. Believe it or not they don't all just do it. It will make the difference of an approval or not.

Once you have completed that you need to make sure there are NO negative marks on your report after the discharge date of the BK! Again, the difference between approval or not.

Next, Start establishing credit post BK. You can do this by obtaining a secured credit card or an auto loan.
The next piece of information I give will be the most valuable,

With regards to your credit card, If your credit line is $500, DO NOT SPEND MORE THAN $100 on it.
One of the scoring factors in the FICO model is your available credit. If you max out your credit - even though you make good payments - it still hurts your score. On the same token, you want to use the card to show you can handle credit responsibly. Use it for gasoline and pay it off when you get paid.

The next thing to do is refrane from letting people run your credit. Go buy the car, and get you card, but that's it. Don't apply for a bunch of credit. These inquiries stay on your record for 2 years and will also hurt your score.

BK is not the end of the world....unless you let it be. It is designed to give you a fresh start and if you do it the right way, you can have a FICO in the 7's in no time. It will take effort on your behalf to monitor and take care of your credit. It can be daunting, but it's worth it.

Here is a link to some FICO information
http://www.scoreinfo.org

It will give you some more insight.

I wouldn't start trying until the discharge is at least two years old. Then find a Realtor and get with their mortgage source and get it rolling.

The big issue is going to be "what do you look like after the BK"

I hope this helps you, and I wish you all the luck!

Jonas Mancuso
Remax / Lakelend
http://www.choosetheballoon.com
http://www.talktohouston.com
2 votes Thank Flag Link Thu Jan 27, 2011
Hi Begood,

You will need to put quite a bit of time between you and that bankruptcy before creditors, including mortgage companies, are willing to lend you money again. It's a long road but you have a chance at a clean start. Focus on keeping any payments you have left on time. Avoid getting any new credit and 2 - 7 years you will be eligible to purchase again if you have kept your credit record clean.
1 vote Thank Flag Link Wed Jan 26, 2011
Most lenders would require you have 2 year track record of paying bills on time and etc.

Virtual answer not to your best interest . contact mortgage broker direct for all your options


Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
1 vote Thank Flag Link Sat Jan 22, 2011
Begood what chapter bankruptcy did you file and what caused it?
Are you a veteran?

Kevin Ramirez
Mortgage Consultant
SunTrust Mortgage
Direct line: 770-277-2341
Fax: 404-739-3213
http://www.suntrustmortgage.com/kramirez
1 vote Thank Flag Link Wed Jan 19, 2011
Requirements:

2 year employment history
Minimum Credit Score (whatever current requirements are.. it changes, right now most likely a 640)
Time period from the bankruptcy must have passed - I believe it's two years depending upon the type of bankruptcy.
You aren't getting a loan anytime soon most likely, but talk to a lender just in case. Don't leave your fate to an online forum where anybody can answer.

Call my friends at Southeast Mortgage for more professional advise relating to obtaining a loan:

770-279-0222
David Neimark, Sr. VP
1 vote Thank Flag Link Tue Jan 18, 2011
Your bankruptcy must be "discharged." That's a wait anywhere from 2 to 4 years.

Julie
Web Reference: http://www.TeamBrittain.com
1 vote Thank Flag Link Tue Jan 18, 2011
how do Canadians buy property in the United States?
0 votes Thank Flag Link Thu Jan 9, 2014
FHA has issued 3 mortgagee letter out this week, with big changes coming on October 15th!

FHA will now allow serious job loss or income reduction (20% reduction in income)to be counted as an extenuating circumstance. Buyer might be eligible to purchase a new home after a 12 month waiting period with excellent re-established credit and documentation of income loss and credit counseling.

Stay tuned! More info to come but this will certainly help get more buyers into the market in our area

According to a letter sent to mortgage lenders, the FHA said it would offer mortgage insurance to borrowers who, during the recession, filed for bankruptcy or lost their homes through a foreclosure or short-sale proceeding.
The insurance is now available to those who can prove they are no longer financially compromised — and met all other FHA requirements.
"FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage," the letter says.
Besides the burden of proof on the borrower to demonstrate a recovery from the "economic event," the potential homeowner must also complete housing counseling. This event would need to result in a minimum loss of 20% of the household income.
The FHA is requiring lenders to verify at least a year has passed since the foreclosure and the economic event is responsible for the loss of the home or bankruptcy.

Joel Lobb (NMLS#57916)
Senior Loan Officer
502-905-3708 cell
502-813-2795 fax
kentuckyloan@gmail.com

Key Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*
Louisville, KY 40222*
http://mylouisvillekentuckymortgage.com
0 votes Thank Flag Link Sat Aug 17, 2013
I had a buyer that wanted to buy a home in Arizona, but he had a Chapter 7 bankruptcy 7 months ago. I introduced a loan program at http://www.cfsflex.com, they allow a mortgage after a foreclosure, short sale, or bankruptcy. There is only a six month waiting period. This is perfect for individuals looking to become homeowners again.
0 votes Thank Flag Link Sun Jul 21, 2013
Good Luck after filling a BK, you will have to wait at least 3 years before you can think about getting a home loan, and it will depend on the lender/underwritter. You will have to keep a good FICO score from here on out and not get into debt again..they will be looking at you from here on out! I know of one Lender that is starting to help some BK clients after a year but it depends on there situation on why they filed which adds tons of justification on the buyers part.. lots of paperwork! But if you don't mind the paperwork then it will be worth it, and I am sure the interest rate will be different.. *FHA keeps changing daily so all I can tell you is ask around as Lenders are doing funny things to help buyers... I know my lender I work with are doing everything it takes to help all my buyers.. Good Luck..
0 votes Thank Flag Link Thu Feb 17, 2011
Lenders will not consider you for a mortgage loan for at least 2-4 years.
Web Reference: http://www.huronhomes.net/
0 votes Thank Flag Link Thu Feb 17, 2011
Begood, You have to wait 2 years from discharge to purchase a home if your credit is clean after the bankruptcy. If you included a home in the bankruptcy you will need to wait 3 years from discharge for an FHA loan and 5 to 7 years for a conventional loan.

You need to keep your credit clean after the bankruptcy. Additionally, you will want to establish a line of new credit to increase your credit score.
Web Reference: http://www.HomesByLorie.com
0 votes Thank Flag Link Wed Feb 16, 2011
Ok, now you have to get back on track and start all over again...
No worries you can do it, get a Lender that has a credit repair program makes
sure they don't charge an arm and a leg to help you get back on track...
It will take you 2 to 3 years depending on the situation to be able to buy a home
again, there are programs out there depending on where you live.... It's best to work
real close with an agent & lender who will help you all the way... I hope this helps you as
I work close with my clients to get them back on there feet, some have been with me for 2 years
and we are now looking for a home thanks to the lender too.. Good Luck ..... If you ever in Vegas NV
please look me up I'll be more than happy to help you...
0 votes Thank Flag Link Wed Jan 26, 2011
It's important to pay all remaining bills on a timely schedule to rebuild your credit score. If you can show a good credit history and steady income for 18 or more months your next step would be to contact a lender to find out how much of a mortgage you may qualify for. This is a great time to purchase a home as a first time homebuyer because of the historically low interest rates and availablity of housing inventory. Best of you luck.
0 votes Thank Flag Link Tue Jan 25, 2011
A lender is your best source. Ask friends and coworkers who they used and set up an appointment. Generally two years or so depending on the circumstances. My suggestion, don't worry about buying a house too soon. Find somewhere where you can enjoy life and concentrate on building back your credit. I would probably go to the bookstore and read what Dave Ramsey has to say to encourage you.
0 votes Thank Flag Link Mon Jan 24, 2011
It would be great to start with an attorney! They can help you sort through anything that might be attached to your files.
0 votes Thank Flag Link Mon Jan 24, 2011
check with a few lenders, mortgage reps, usually in our state here in NJ, I believe you have to wait a year or 1.5 to 2yrs, and it has to be discharged, and also depends on what Chapter? good luck, and you can start to rebuild your credit with contacting a credit counselor or a good mortgage rep can assist too, keep searching, good luck.
0 votes Thank Flag Link Fri Jan 21, 2011
Your particular circumstances will determine the answer. I you are looking to buy in North Atlanta, feel free to contact me. NAR has a great page on this with general guidelines.... I can email it to you if you like.
0 votes Thank Flag Link Fri Jan 21, 2011
You should consult with an attorney first. There are many variable, whether it was chapter 7 or chapter 13. How long ago was this bankruptcy? According to Fannie Mae and Freddie Mach guidelines, 2 years, however it varies state to state. Please check with attorney first, then seek consumer credit counseling that will provide answers to all credit questions.

It would be wise to this before consulting a Realtor or Lender. What is also helpful, is that you could Google, bankruptcy court and the state your from and the website should have federal rules and regulations as well for reference.
0 votes Thank Flag Link Fri Jan 21, 2011
The best answer is to check with your Realtor to seek advise from an experinced Lender.
0 votes Thank Flag Link Fri Jan 21, 2011
Historically, the answer has been 2 years. However, in light of the mortgage meltdown we have encountered, the answer is not so black and white. It tends to be more gray these days. A lot depends on whether you filed Chapter 7 or Chapter 11 and whether or not a foreclosure was involved. The best advise I can give you is to find a Good, experienced mortgage lender to guide you through the process. Remember this: only banks and mortgage lenders can help you expedite your credit recovery. Do not pay any non-lender to do this for you. It will be money wasted.
If you would like a few lender referrals, just write me and I will be happy to assist you with that.
0 votes Thank Flag Link Thu Jan 20, 2011
Hard Money Lenders are few and far between and the down payment is 30% or more.

You won't find a lender that will accept a co-signer to offset your bankruptcy. It just is not done.


You are better off, getting your credit re-established and saving money for a reasonable down payment.

http://mortgageinfopage.com/
0 votes Thank Flag Link Thu Jan 20, 2011
Hello, the three main requirements for buying a home today is credit, income and down payment. The amount of the home will determine how much you will need to earn and the down payment amount.
Web Reference: http://www.RhondaHolt.com
0 votes Thank Flag Link Thu Jan 20, 2011
It would be best to wait at least one year before buying a home. The banks probaly wont lend to you and if they do, your rate would be tremendously high.
0 votes Thank Flag Link Wed Jan 19, 2011
Hello there.

If you filed bankruptcy last year, this may be more the time for rebuilding ... unless you are purchasing with cash. Right now, TIME is the best medicine. But, no need for despair. There are 4 things you can start on right now to move the process along faster.

Review your credit report and check for any inaccuracies
Pay your bills on time
Beware of credit repair companies
Apply for credit

For a more detailed description, you can click on the link to check out the my full blog article on rebuilding your credit after foreclosure.

All the Best,
Tina Ciaccio
0 votes Thank Flag Link Wed Jan 19, 2011
After filing bankruptcy you must begin to rebuild your credit if you want to get a mortgage. Pay all bills on time such as utilities, rent etc. These will help you build you credit file later on. It will be sometime before you will be able to purchase using standard mortgages which would provide the lowest interest rates. I would not recommend you use private lenders until you re-establish yourself as interest rates on those types of mortgages can run very high and terms are very costly. I would typically meet with a buyer and get all details as each circumstance is so unique to determine a specific course of action for an individual.
0 votes Thank Flag Link Wed Jan 19, 2011
If you obtaining an FHA mortgage you must wait 2 years from when your Bankruptcy is discharged. You can not have any late payment on new credit lines that you may have opened after the bankruptcy. Go ahead and talk to a lender to get a feel for what you will need to do.
0 votes Thank Flag Link Wed Jan 19, 2011
If you are paying all cash toward the purchase of a house, you can buy any time. As far as bankruptcy filing is concerned you need to contact an attorney in your town who specializes in bankruptcy law for the waiting period before your credit is restored to obtain a home loan at good rate! I hope this helps you.
0 votes Thank Flag Link Wed Jan 19, 2011
Hi Begood,

Be determined. With today's strict lender requirements the road ahead can be tough! If you have a significant downpayment and have steady income it is possible. My advice is to know your score and work on it. Also talk to your lender!

Best of luck,
Maria
0 votes Thank Flag Link Wed Jan 19, 2011
Hi Begood:

Need to be good for 2 years, otherwise you need to talk to hard money lenders
who I can refer you to, but will charge over 10%.

Perry
Web Reference: http://www.ruthandperry.com
0 votes Thank Flag Link Wed Jan 19, 2011
FHA financing requires you re-establish your credit, and keep every in good standing for atleast 2 years, that is you can close on an FHA mortgage the day after the 2nd anniversary of your bankruptcy discharge.
0 votes Thank Flag Link Wed Jan 19, 2011
Cash along with a co-signer that has good credit. Goog luck and don't give up
0 votes Thank Flag Link Wed Jan 19, 2011
You will need Lots of CASH.And you will have a high interest rate.Good luck.
Web Reference: http://homeslotsandland.net
0 votes Thank Flag Link Wed Jan 19, 2011
Call your lender and check the requirements. Rules are continuously changing. Your eligibility will depend on your credit score, reason for bankruptsy, credit before and after, type of loan you qualify for etc. Most of my clients have to wait at least two years.
0 votes Thank Flag Link Wed Jan 19, 2011
Call your local lender. They will be able to answer any financing and procedural questions you may have.
0 votes Thank Flag Link Wed Jan 19, 2011
Just depends on why you filed, what you filed, when it was discharged and how much money you have to put down. Contact a local lender they should be able to look at your filings and let you know.
0 votes Thank Flag Link Wed Jan 19, 2011
There is really too many variables. If the bankruptcy is discharged and you had relatively good credit beforehand, I've seen lenders take people almost immediately after--even in the current financial market. I work with one lender whom constantly amazes me what he gets through. I'd contact a local agent in your area and set up a meeting to consult with you.
0 votes Thank Flag Link Wed Jan 19, 2011
At this point in time, and the guidelines do change periodically, you would need to wait 2 years if you would pursue a VA loan if you are a veteran, or 2 years for an FHA loan if you filed Chapter 7. If you filed Chapter 13, it could be one year. These time frames are from the date the bankruptcy was discharged. For conventional financing, it's 2 years for chapter 13, 4 years for Chapter 7. You would need to talk to a local lender about what the FHA loan limits are for your area, they vary. Conventional loans are usually for higher amounts. Jumbo loans over $417K are 7-10 years after Chapter 7 & 13 respectively. You'll need to save for a down payment, at least 3.5 % of purchase price for an FHA loan, plus closing costs. Talking to a lender will give you your options for your situation and price range.
0 votes Thank Flag Link Wed Jan 19, 2011
3 years average timeframe in order to apply for a mortgage
0 votes Thank Flag Link Wed Jan 19, 2011
First thing, contact a lender. Tell them about your situation. The worst thing that can happen is they will tell you that you will not qualify for a loan at this time. Your credit score and the time you have been on your job will be one of the first things they will look at. Just remember, everytime your credit score is ran your number will go down. So be careful, do not call a bunch of different lenders trying to find one who will say yes. Do some research and call one that you would want to work with through the long run. Also, unless your lender advises you, do not go out and open a bunch of credit cards trying to re-establish your credit. Everytime you do your credit report will be checked lowering your score even more..... Find a lender you can trust and follow their steps to gets things where they need to be. Good Luck!
0 votes Thank Flag Link Wed Jan 19, 2011
These days it is much tougher for anyone to secure a loan with out a good credit score. The score actually affects the interest rate the lender will offer for the loan. So first of all I'd be checking to make sure your credit
reports are accurate. The next thing would be to talk to a Bank or Mortgage Broker to get a pre-approval for a loan, so you know up front how much you can afford. Hope this helps.
0 votes Thank Flag Link Wed Jan 19, 2011
Simple answer is 2 years but there are exceptions available, talk to your local lender.
0 votes Thank Flag Link Wed Jan 19, 2011
Must talk to a lender first! They will let you know if you are pre-qualified for a mortgage loan and for how much. With that knowledge, we can start looking for your new home within the area and price range that you qualify for. Warning, you MUST have good credit to get a loan.
Web Reference: http://www.huronhomes.net
0 votes Thank Flag Link Wed Jan 19, 2011
When will your bankrupcy be discharged? Once a bankruptcy has occurred, the best thing you can do is to start rebuilding your credit immediately. You should also speak with a lender in your area that has a good track record and is recommended by individuals you trust. This will give you a road map of what steps you wil need to take as well as a time frame for being able to purchase a home. As previous advice has suggested, you can also seek out properties that are lease to own or owner carry.

Best wishes to you!
0 votes Thank Flag Link Wed Jan 19, 2011
you will have to wait 2 years to be able to buy. You might want to consider a lease purchase that way if you find something you like this will be an option for you. good luck
Web Reference: http://HomesAttheLake.net
0 votes Thank Flag Link Wed Jan 19, 2011
According to recent meetings we have had with banks, Banks will not lend if you filed within the year. I suggest you speak to a mortgage broker or lender and then plan for the future.
0 votes Thank Flag Link Wed Jan 19, 2011
You will need to be discharged. The time depends on the type of bankruptcy and the type of loan.

Some guidelines state you can qualify with as little as 12 months elapsed since discharged discharged.

See here: http://mortgageinfopage.com/viewforum.php?f=37
0 votes Thank Flag Link Wed Jan 19, 2011
Begood,

You mentioned that you filed bankruptcy. Has the bankruptcy been discharged? If not, you may want withdraw from the bankruptcy proceedings if buying a home is a priority.

Also the type of bankruptcy (Chapter 13 or Chapter 7) will determine when you can obtain financing. I agree with Howard that you may want to look at lease to own options in the near term if your bankruptcy has been discharged.

Timothy Brown
President,
Academy Residential Mortgage
678 467-9959
0 votes Thank Flag Link Wed Jan 19, 2011
You will probably have to find a home that an owner is selling with owner financing or on a rent to own option. Depending on the sellers requirements this can enable you to purchase a home with little to no money down. I'm presently selling a 2 bed / 1 bath home in the area with owner financing if interested feel free tocall Howard at (917) 681-6788
0 votes Thank Flag Link Tue Jan 18, 2011
If you filed bankruptcy using a lawyer in Georgia you should ask that person. That being said if you’re buying all cash not a problem. Now, if you wanting to obtain a loan it’s not going to happen.

John
0 votes Thank Flag Link Tue Jan 18, 2011
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