Is it Possible to Get Mortgage After Bankruptcy?
December 10th, 2009 by adminRegardless of the recent housing crises, getting a mortgage after bankruptcy is still possible, though still difficult. However, with a good plan and a willingness to rebuild your credit for a couple of years, this is definitely and achievable goal.
Most loans require you to wait at lest two years after bankruptcy discharge before applying for a mortgage. Lender will consider other factors than your credit score (though this is still an important part of the equation) when considering loan applications. The two main criteria will be your income level and your down payment amount. You can be asked to prove regular employment, regular income and access to financial resources. You will find that a larger down payment will be required, and the interest rates will be higher than normal. These kinds of terms, may not be great for the borrower, but gives the lender security on their expenditure and minimize their exposure to risk.
- Know your Credit Score: If you don’t know how your credit score looks after bankruptcy, you’re blindly heading for failure. You absolutely need to go and either gain a copy, or get a professional to look at it to tell you what needs to be fixed. There have been a lot of cases where debts are still showing as unpaid, or there are just errors on the score that needed to be fixed. Lenders analyze your credit score to determine whether or not to approve a home mortgage, a car purchase and nearly all other types of loans. Before lending you money, creditors want to determine how much of a risk you are in other words, how likely you are to repay the money they loan you. Credit scores help them do that, and the higher your score, the less risk they feel you’ll be.
The key to getting a home mortgage after bankruptcy is to immediately start rebuilding your credit.
- Making a large down payment means that you have made a significant commitment to the property you are buying, and indicates the lender that you are less likely to default on any payments, not only because you might lose your property, but also because you risk losing a significant amount of money. This being the case, sustaining on time payments and perfect credit history after bankruptcy is extremely important. Even the slightest sign of over and over again delinquent payments, overuse of credit or having too much debt may hamper your eligibility for a mortgage loan. Unfortunately, the sub-prime mortgage crisis has made life even more difficult.
- Two types of personal bankruptcy cases that the mortgage loan lenders deal with. The first is the chapter 13 bankruptcy where all your debts are reorganized over time and are finally paid out and the other is the chapter7 bankruptcy where all the assets of the debtors are liquidated. A chapter 13 filing stays on the credit report for 7 years as against the 10 years for chapter 7.
Conclusion: It is entirely possible for most people to secure mortgages after bankruptcy (even right after), but patience pays off. If you are certain that you will be able to afford a home and all of the costs that come with it, then you definitely can find a mortgage to suit your needs.
Life After Foreclosure
December 9th, 2009 by adminRecent statistics showed that foreclosure filings reached one million in May with indications that the number could swell to 2.4 million by the end of 2009. Unfortunately, much like filing bankruptcy, the ramifications of a foreclosure filing will follow these families around for a long time. The first issue following a foreclosure, however, is an immediate one; finding a new place to live. Many families, in the battle to remain in their home, will use up most or all of their funds prior to foreclosure. That leaves them empty handed once the foreclosure is done. Combined with a credit score that reflects the foreclosure, the lack of funds can make a prospective landlord queasy about approving an applicant in this situation. Solutions include:
* Writing a letter of explanation to accompany the lease application. Putting a story behind the current situation, along with a detailed solution can go a long way.
* Offering a larger deposit than required. It may have to be borrowed or saved during the last stages of the foreclosure but the offer of a larger deposit will serve to lessen the risk perceived by the landlord.
* If there is a solid income history, leasing a property at a small fraction of the total income will ease the concerns of a landlord.
The second issue is the inevitable hit on the homeowner’s credit score. Credit scoring is now integrated so that a foreclosure will not be an isolated event. Once a foreclosure hits a report, credit card interest rates will skyrocket and credit limits will be slashed. Carrying a high balance on credit cards can be prohibitively expensive at interest rates above 27%. It will also be difficult and expensive to get approved for any other type of loans. Solutions include:
* Debt settlement ? Defaulting on consumer debt and then doing nothing doesn’t make it go away. Additionally, staying current on your cards with rates at 30% is going to take precious money away from lease deposits, etc. If your credit score is going to take a pounding anyway, entering a debt settlement will cut your payments in half and pay the debt off within 48 months.
* Be proactive regarding your credit score. Be sure to note your scores when balances are paid off. Your credit score can be re-built over time as you get out of debt.
Like bankruptcies, prospective employers are now focusing more attention on foreclosure filings in terms of judging the character and financial responsibility of the applicant. Credit checks are now a regular part of the screening process, especially when there are a number of applicants. A foreclosure can tip the scales if everything else is equal between two applicants. A possible solution is to have a letter of explanation detailing the events that led to the foreclosure. Total honesty is going to be the best approach here and, who knows, if the person hiring you is going through his own set of financial challenges you may just find some common ground which to you getting a break.
The IRS considers the amount of money owed on the mortgage that is not recovered from the sale of the property as income for the homeowner. In any case where debt is forgiven, the amount not paid back will be taxed as income. Solutions here include a congressional pass that exempts the owners of foreclosed property from a tax hit if it was their primary residence and the property wasn’t refinanced with a cash out loan. The tax bill can also be avoided by proving insolvency. If your debts are greater than your assets you’ll be allowed a pass on money owed for forgiven debt.
In the end, the mental toll of being forced from your home and community could be the greatest cost. The best solution is to focus on learning from mistakes, putting the past in the past, and moving forward. Lastly, like filing bankruptcy, the stigma of filing foreclosure doesn’t carry the baggage that it once did. As widespread as foreclosures are and with delinquencies occurring in 12% of homes across the country, they are quickly becoming seen as another part of life, not some sort of massive failure.
Rebuilding Credit After Bankruptcy – Tips And Suggestions
November 10th, 2009 by adminIndividuals, who have filed for bankruptcies, find rebuilding credit status a very difficult activity, after the bankruptcy has been dealt with. It’s important to rebuild credit after coming out of bankruptcy, since account details are flagged for seven years right after the inception of bankruptcy. One might experience certain financial hardships, especially when it comes to availing loans and credit facilities from creditors. At times, individuals often feel getting fresh or new credit after Chapter 7 bankruptcy or Chapter 13 bankruptcy is next to impossible. The primary reason why this happens is because:-
* The bankruptcy leaves a negative impact on your credit score and ratings for as long as seven years.
* The credit scores and FICO takes a beating during and just after bankruptcy. So creditors don’t feel like sponsoring an individual who has bad credit history and poor ratings.
The basic issue is file for bankruptcy can lead to long time repercussions, and that comments related to bankruptcy remain on the credit report for as long as ten years, and the related negative information for nearly seven years. However, it’s possible to correct the situation, and rebuild the credit status and ratings even after the bankruptcy. Typically, when a creditor reviews a credit application, it’s checked for steady employment history, low delinquency status and levels, a good history of monthly payments, and the overall status of the savings accounts. The following tips can help the individual rebuild the credit status after being bankrupt:
* Secured credit cards: It’s possible to reestablish the credit ratings by applying for a secured credit card. This can be done by creating or setting up a savings account within a reputed bank that offers secured credit card facilities, and later applying for a credit card.
* Unsecured credit cards : A few banks offer unsecured credit cards facilities. In such cases, no deposit needs to be deposited, to avail the facilities. It can be a very good option in reestablishing new credit ratings. In order to qualify, one needs to be employed, and provide identity as well as residence proof in the form of telephone or utility bills. The individual also needs to have a certain fixed monthly income. The credit history should not include any recent derogatory entries or comments within the past six months.
* Merchants: Filing a bankruptcy is not advisable, as it’s guaranteed to affect the credit ratings. The local merchants can help in reestablishing fresh credit ratings. It’s possible. One needs to find out whether they report all payment activities to a credit bureau, and in the event they do, carry out transactions with them. If the merchants approve the purchase activity, one need to pay off the item’s cost within 90 days. By carefully carrying out certain calculated transactions every month, it’s possible to control the credit history. And one can improve upon the credit ratings, by exhibiting good quality transactions.
* Automobile: Certain dealers specialize in selling cars to individuals who have faced bankruptcy, or possess bad credit ratings. So one can possibly check out the telephone directory, or alternately look out for advertisements of car retailers and dealers who specialize in such issues. One should be prepared to pay big deposits, and higher interest rates. The automobile bought functions as collateral for the loan availed. Since the credit facility is associated with high interest rates, many dealers might be interested in helping out. One need to ensure all payments is made on time. Timely payments can help build good credit reports.
How much time do I have to move after my home has been sold at a foreclosure sale?
October 16th, 2009 by adminHow much time do I have to move after my home has been sold at a foreclosure sale?
After the foreclosure sale there is a 10 day upset bid period before the sale becomes final. After that time has passed and there have been no upset bids the sale then becomes final. At that point the third party buyer, the lender, or the foreclosure trustee who purchases the property or represents the purchaser of the property at the foreclosure sale will then send you a letter, probably via certified mail, stating that you have 10 days to voluntarily vacate the home. Once the ten days period in the letter has expired the third party buyer or lender will apply to the Clerk of Superior Court for an Order for Possession. If the Clerk allows the Order for Possession
