FHA loans after bankruptcy
FHA is a federal assistance loan that is insured by the Federal Housing Administration. FHA loans have traditionally allowed people from the lower income to purchase a home that they otherwise would not be able to afford. The program rose into prominence during the great depression period when rates of foreclosures shot up like anything along with the subsequent increase in defaults. Though some FHA programs were subsidized by government, the ultimate goal was to make a self-supporting entity, based on the insurance premiums contributed by the borrowers. However, with the passage of time private mortgage insurance (PMI) reared its head and now the FHA primarily helps people who cannot afford the usual payment or dont qualify for PMI insurance.
Filing bankruptcy need not exactly be the end of the world; there are numerous bankruptcy loans that can bail you out of the financial crisis. Even people with a recent blemish of a bankruptcy in their credit history can get a home loan. The prime reason being that, lenders are comfortable in giving you a home loan is that a house in itself is an asset. Most companies approve your loan after a period of two years after you file bankruptcy. However, depending upon the type of bankruptcy that you have filed and the time you took to clear your credit, the loan may be approved in a period of one to two years.
Bankruptcy and home loans
A large proposition of home loans depend on guarantees rendered by the FHA or VA loans. Your eligibility to qualify for them determines when you will be able to obtain a home loan. The best way to increase your chance of getting a home loan is by opening a new credit card account right after you file for bankruptcy. Try to maintain the credit card account properly. It is always recommended to wait for a couple of years after filing for bankruptcy before applying for a housing loan. This is to get your credit record back to normality. If its your first home purchase then its better to stick to loans with a down payment as it tends to add to your credibility. Unfortunately there exist no loans which are available while still on Chapter 13 however there are loan programs available with a recent bankruptcy and foreclosure.
FHA loans and bankruptcy
Individuals who have filed a bankruptcy less than two years ago are not qualified for a FHA loan. Once an individual has been in the Chapter 13 for two years, they are eligible for it provided they made the last 12 month payment on time. An individual wont be eligible for an FHA loan until three years has passed since his/her last foreclosure. FHA will insure mortgages to individuals who have filed for Chapter 7 liquidation bankruptcy two years after the discharge provided the borrower has re-established good credit(or has chosen not to incur new credit obligations), and has demonstrated an ability to manage financial affairs.
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