 |
 |
 |
           |
 |
 |
 |
|
 |
 |
|
|
|
 |
Recent Bankruptcy? Its Not Impossible to Obtain a Home Loan
Because the new bankruptcy laws go into effect on October 17, 2005, more Americans than ever are filing for relief using the federal bankruptcy laws. The vast majority are simply overextended and cannot possibly repay the obligations they have open. However, for many filers, the opportunity of homeownership may be possible immediately after discharge. Ironically, some those that would not previously qualify for a mortgage do qualify after a bankruptcy. How is that possible? An example of this is Dave Olson (a fictional character). He earns $4,000 per month, spends $1,000 on rent,$250 on car payments, and $2,000 on credit card minimum payments. The DTI* (debt-to-income) ratio of this person is 81.25%. Since his credit score is low (600 middle FICO), the only option is a mortgage that requires full documentation. Most of those loans require a DTI of 50-55% maximum. The Chapter 7 bankruptcy is filed and Dave gets a discharge. He reaffirms his auto loan and still rents for $1,000/month. However, now his monthly debt is much lower (($1,000+250)/4,000=31.25%). The bankruptcy has actually increased his chances of obtaining financing for a purchase. Many times, the credit score is the same after the bankruptcy as prior to filing (unless creditors report incorrectly). By filing simple dispute letters with the three credit bureaus, those discrepencies can be cleared up within a few months. It makes sense that borrowers are most ready to borrow for home purchases after bankruptcy because they cannot file Chapter 7 for 6 years, their obligations are lowered, and the property being purchased is secured. That means the lender can repossess the property if payments are not made timely. There are some things to keep in mind if you are purchasing a home after a recently discharged bankruptcy. 1) A downpayment isn't always necessary, but it will improve the rate. 2) Most people opt for an Adustable Rate Mortgage (ARM) since the rates are much lower than a fixed and they plan to refinance in 2-3 years. 3) Most of these loans have a prepayment penalty that matches the fixed period of the financing. 4) Most lenders require cancelled checks or verification of rent paid not later than 30 days in the past 12 months. 5) A foreclosure before the bankruptcy is hard to overcome. A foreclosure as a result of the bankruptcy usually doesn't count. Everyone's situation is different. To ensure the best service, be sure you contact an experience mortgage originator that will take the time to listen to your situation and explain all the possibilities. It shouldn't cost you anything to inquire. Clinton Bengtson has been a mortgage originator (loan officer) for almost 5 years. Prior to that, he was a CPA working at several large companies. Clint Bengtson has helped hundreds of people become homeowners that were declined at other lenders. Experience is important and can mean the difference between approved and not approved. Visit his website at http://www.mnmortgage.net for more information.
MORE RESOURCES:
Mortgage-Refinance - Google News |
|
|
|
RELATED ARTICLES
Why Choose a Home Improvement Loan? Many people choose to take out home improvement loans so they can give their house a new look before selling.Home Improvement Loans can help you if you have been considering doing some home improvements to your home and have now decided to look for a loan to turn those home improvement ideas into reality. Some of the Available Loan Types There are many mortgage products available on the market today. We can help you find out which one is right for you. Home Mortgage Loan Information - Which Type of Home Loan is Best For You? If you are considering buying a home, then you may be more than a little confused by all of the terms you hear about home loans. After all, lenders throw around words like fixed rate, balloon mortgages and adjustable rate mortgages without a thought. Save Time With a Bridge Loan Why You Need a Bridge LoanYou have to move fast in today's housing market if you want to get into the home of your dreams. In cities such as Seattle or San Francisco it's not uncommon for a buyer to receive half a dozen offers within the first day or two after putting the house on the market. Taking the Time to Find the Best Home Improvement Loans The best home improvement loans usually aren't going to be the first loans that you encounter, but if you're in the market for a loan to pay for repairs, expansions, or improvements to your home or other real estate then it might be worth your time to shop around before you decide on one loan or another.Shopping around for the best home improvement loans isn't a lot of work, though it can be a bit time consuming and requires quite a bit of legwork. Council Right To Buy Mortgage - Transform Your Accommodation Into Home Homeowner - does this term catch your attention every time you hear it? It is a powerful term. It is hard being a tenant for long. Why a Mortgage Professional Beats a Banker Every Time -- The Story Tells It All The best way to explain why a mortgage professional is always better than a banker is to use an anecdote. My parents lived in the house I grew up in for 35 years, so it was finally time to move. Mortgage Terminology for the First Time Home Buyer Buying a Home for the first time can be a little "nerve racking". Mortgage terminology that brokers use everyday can leave you scratching your head or shaking your head pretending that you know what they're talking about. Home Buyers Face Decisions that Affect Their Long-Term Financial Picture Taking the step for prospective home buyers.into home ownership is one of the most important financial decisions a person will make in their lifetime. Home Equity Loan - With a Reverse Mortgage, Your Home Pays You! The home equity loan has become quite popular in the last five years, and Americans have tapped into the equity of their homes in record numbers. The reasons vary, although home improvement and debt consolidation are the most common reasons for borrowing against a home's equity. Apply For Home Mortgage Loan Online With Bad Credit - Things To Consider So, you've found the perfect home. You've already decided where to place each piece of your furniture inside the home, and in your mind, all of your family photographs are hanging alongside the stairwell. Kippers or Red Herrings? Recent news has made much of parents stretching their finances to cover costs for their twenty and thirty something children. Debts and high property prices have forced many offspring to return home, tail between legs, under the attractive new marketing term of "kippers": kids in parents' pockets eroding retirement savings. Home Mortgage Loan Refinance - Benefits To Refinancing Your House Online Here are some of the benefits to doing your home loan refinance online:Everything seems to happen faster - Online, when looking for a mortgage loan you can search around, fill out an application and a few minutes later, you can be receiving a pre-approval letter via email. There was no calling, no driving & no waiting on hold for an answer. How to Get the Best Mortgage This is a guide on how to get the best mortgage deal. Do not rush into the first offer that is made to you even if you are in a hurry for a mortgage. Secured Homeowner Loans to Reiterate that a Home Provides More than a Roof Over Your Head "The ache for home lives in all of us, the safe place where we can go as we are and not be questioned."It is a challenge to find a place like that. Tips for First Time Home Buyers When looking at tips for first time home buyers, you've come to the right place. Many people are looking all over the Internet for reliable information. Flexible Mortgage Guide Here is a useful flexible mortgage guide. Flexible mortgages are loans which allow you to increase or decrease the size of your repayments within certain limits. Bad Credit Mortgage Lenders - Things You Should Know About Subprime Lenders Interest rates and fees vary between subprime lenders just like regular mortgage lenders. Just because you have bad credit, that doesn't mean you should accept the first financing offer from a subprime lender. Online Home Equity Loans: A Basic Glossary Home equity loans can be a great idea for individuals looking to get out of debt or make necessary repairs on their homes. During the process, you will come across a variety of terms and acronyms. Refinancing Your Mortgage Can Really Save You Money Refinancing a mortgage is simply taking out a new mortgage. It means paying off one or more old debts by getting a new loan.
|
 |