BUYING A HOME AFTER BANKRUPTCY

Credit problems and re-entering the home buying market.

Filing for bankruptcy is not the end of the world. 

Speed up that recovery process!

The wait times (to get a mortgage) for a borrower with a previous bankruptcy is essentially 2 years (FHA) and 4 years (conventional).

Buyers should begin the credit recovery process the day after their bankruptcy is discharged by the court trustee.
     A jump start in the process is acquired by reaffirming debt within the bankruptcy process; most  

     often these are secured debts such as car loans, student loans and current mortgage.
These buyers Fico scores will recover faster as they maintain a “on time” consistent payment

     history.​

Once a bankruptcy is discharged, it is absolutely critical borrowers have ZERO “lates” until their (future) mortgage funds.

     Even just one 30 day late after BK can cause an underwriter to decline a loan based on their

     discretion.​

The minimum time for a clean credit history is 6-12 months with 2-3 credit (trade-line) accounts.

A half-dozen times in my 35+ year career I’ve had clients declare BK with a perfect credit history. They deduced their situation was hopeless, reached their credit limits and strategically declared BK (while re-affirming a handful of credit lines).
Ironically enough their scores were only impacted 50-60 points, their scores were back to pre BK scores  in 12-18 months.

For those clients are starting completely over:
The quickest method is to apply for secured cards. Buyers should absolutely avoid applying for unsecured cards as there chances of being approved are less than 10% and credit inquiries will drive (post BK) scores even lower.​