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Home Loans After Bankruptcy

Home Loans After Bankruptcy

One need not always lose the ownership of the house after filing bankruptcy. There are many factors that decide whether a person can retain ownership or not. A person can still own the house after he or she has filed for Chapter 13 bankruptcy. This plan gives the opportunity to the owner to repay debt within 5 years. Filing Chapter 7 makes one bound to the mortgage in spite of the bankruptcy filing and he or she can continue to remain the owner of the house.Buying a house after bankruptcy is a challenging task because the credit worthiness of an individual reaches the lowest ebb. The following tips can be used for purchasing a house after filing for bankruptcy.How to buy a house after bankruptcy A FICO credit score of minimum of 620 is needed to buy a home. But bankruptcy drags the score to 300. So, one has to first improve the credit score. A credit score of 780 or more favors a house owner to avail mortgage loan at lower interest rates. One can avail FHA (Federal Housing Administration) insured loan for refinancing their mortgage at a lower interest rate.People who filed Chapter 13 have to wait for a period of 2 years to buy a home again. People who availed loans with the FHA insurance are expected to make twelve consecutive payments to purchase a house again as the terms and conditions are less stringent. The veterans who are eligible may make use of VA (Veteran Administration) loan after bankruptcy as the waiting period is only 2 years.The debt-income ratio indicates a borrower a borrower’s ability to discharge mortgage debt. A lower ratio is highly desirable.In any case it is an arduous task to avail mortgage loans after bankruptcy. So one has to avoid bankruptcy at the first place and constantly look for alternatives.