The dream of buying a home is not over as you filed for bankruptcy chapter 7. People having bankruptcy may be considered as their worst financial disaster in life. The true fact is dark night does not exist long. Day must come after dark night. So you may have a bad time but a good time is also waiting for you.
When you are going to buy a home, you may need mortgage loan. But you don’t give up hope as you may think that you are not going to be eligible for getting any mortgage loans. There are so many mortgage companies that deal with bankruptcies, where you can get loans so easily. Surely we can give you some information on how you can get mortgage loans in spite of filing bankruptcy chapter 7.
Where You Can Get Mortgage Loans After Chapter 7 Easily
There are some government backed programs that deal with mortgage loans for the people having bankruptcy after chapter 7. They don’t consider that you had to file for bankruptcy chapter 7. Surely these government backed programs are ready to offer loans at lower interest rate and down payment as well.
FHA (Federal Housing Authority) loans are always simple types of loans which may be available for the first time home buyers. The home buyers may also have a status of bankruptcy. Bankruptcy is a status where bankrupt people has to face a lot of problems in financial benefits. However the government believes that people even though having bankruptcy status may qualify for loans backed by the government.
If the people have already filed for bankruptcy chapter 7, they have to wait for 2 years from the date of discharge. Then they have a chance for applying for FHA loans. In the event of foreclosure, the waiting period is 3 years. But it does not mean that you are waiting for 2 or 3 years from discharge. If you didn’t have any fault of being bankrupt, you may apply after 12 months with related papers that support that you were not a reason for bankruptcy.
The functions of FHA loans is different because it does not provide loans directly to the consumers. Commercial banks provide loans but those banks are recommended by the government. However people having bankruptcy chapter 7 may enjoy laxer rules and regulation to get this loan. On the other hand, some private banks may impose stringent requirements that make it so difficult to get loans from the bank.
More importantly FHA loans may have some requirements like liberal credit score and very lower amount of down payment. Those people who want to buy home may put only 3.5% as down payment. In some cases, your credit score is not mandatory for applying loans under FHA.
VA (Veteran’s Affairs) Loans
Veterans have also some simple scopes to get loans from the government program. Surely the government offers a lot of ways to the veteran people who want to buy home if they have bankruptcy status.
The waiting period of this case is only 2 years. In the event of foreclosure, the waiting period is same. The requirement of this VA Loan is your credit score should be clean enough to convince the government. You also need to prove that you have much capability to pay the loans according to your present financial condition. So within 2 years after discharge under chapter 7, you should take care of your credit score that can make you eligible to get loans from the first process.
USDA (United States Department of Agriculture) Loans
The government also have a lot of ways to develop the people in the rural areas. The people living in rural areas can get loans from the USDA programs so easily. The big benefit of this loan program is there is a very lower rate of interest which can be a good deal indeed.
The waiting period required by the USDA loans is longer than FHA or VA loans. The people who filed for chapter 7 have to wait for 3 years after discharge. In the event of foreclosure, the waiting period is same. But there is another issue that you may apply after 12 months after discharge in case you can prove that bankruptcy was caused by other factors. You didn’t have any specific reason to be bankrupt and this can work best for you to get loans from USDA programs.
Fannie Mae and Freddie Mac (Conventional Loan)
It is one of the conventional loans offered and sponsored by the government. It is also insured by the government sponsored enterprise. But the rules and requirement of Fannie Mae and Freddie Mac are same as FHA, VA and USDA loans. The people who filed for bankruptcy chapter 7 can qualify for loans under this program so easily and can get loans.
However the waiting period is going to be longer than other programs. The people can get loans if they have been discharged. After 4 years of discharge, they can apply for loans. But extenuating circumstance may be so effective to reduce the waiting period to 24 months. However the people who are getting longer time can get longer time to rebuild their credit score which can enable to get loans in future without any hassle.
How Can You Improve Credit Score In Waiting Period?
Bankruptcy is really a bad status for the people. This status stays longer time on the credit report and it is seen that bankruptcy is reported on credit score for 10 years. The waiting period can be your opportunity to avail for the improvement of the credit score. Though you have bankruptcy case, your good credit score can help you win in the battle of financial terms.
Rebuild Your Credit
As you filed for bankruptcy case, you don’t worry for not getting any financial benefits from the government or other financial institution. You will have waiting period and this can best option to use this waiting period. In this time, you rebuild your credit score to make sure you are fit for the future financial benefits. Surely you have a budget monthly or weekly and you need to spend on timely manner. You should make a cost effective budget to make sure your spending to bill pay net on time.
Additionally you should have a good credit utilization rate and make it use for shorter time. You can be benefitted if you use this credit card less than 30%. This can be so effective for the improvement of your credit score even if you had a very bad credit.
Whatever you earn should be spent in well planned way. You always earn more and spend less. The difference is the power to be used for future financial benefits. The amount that is saved from your earning should be a fund. In the case of bankruptcy, this amount may be accumulated to form an emergency fund.
However when you are first time home buyers with bankruptcy status and have a very bad credit, this emergency fund can be a big solution. Mortgage loan requires a sum of amount as down payment and this emergency can be used to pay that amount instead of borrowing from other parties. In the same way, you have already improved the credit score and it is going to be so easy for you to get mortgage loans in spite having bankruptcy case.
Get Secured Credit Card
After bankruptcy, it is better to keep from away credit card use. In case you have to use credit card, you go secured credit card. An amount as security is to be deposited and your spending through credit card may be limited for this secured deposit. For example you have $300 security amount that will be deposited in the account. But this amount can withdraw while you are going to close the account. However this way can make a positive credit history.
Become An Authorized User
Your credit card should not be the way to spend money for all family members. If family members use it, they may spend over and unnecessary purposes. In fact you know better how you can pay amount of credit card spending. If you are an authorized user of your credit card, your spending is going to be surely controlled. A controlled spending and repayment of money can improve your credit history indeed.
Monitor Your Credit Report
What is going on your credit card should be in way where you know everything. There are credit bureaus who maintain credit report of your credit report. If there is something wrong, you can be economical and careful to take effective steps. So you collect credit report on regular basis to make sure there is no wrong with your credit card.
Settle Dispute Of Credit Issue With Credit Bureaus
Filing bankruptcy status stay on 7 years on credit report or even more. Maintaining a good credit is pre condition for future financial benefit. You can have any dispute of your credit card that may make bad impression. If you find this anyhow, you should settle it with the help of credit bureaus who make your credit card legit and authentic. This can be best in case you have already bad status of bankruptcy.
The most important thing to consider is that you need to prove that your present financial status is good enough to pay the loan amount onward. For this, you should use your chances to improve your credit score in the waiting period. Your dream to be a home owner is going to be so easy and there is no complicacy as you may think. People will always have a chance to improve the financial condition.