10
Aug
By support
Home Mortgage Tips

Can You Get a Mortgage after a Chapter 7 Bankruptcy Discharge? Yes – But You’ll Have to Wait

Can You Get a Mortgage after a Chapter 7 Bankruptcy Discharge? Yes - But You'll Have to Wait There was a time when it was possible to acquire a mortgage shortly after filing for Chapter 7 bankruptcy, but with the shifts in the financial sector, the timeline on such a mortgage approval has changed in recent years. If you’re currently undergoing a Chapter 7 bankruptcy and are wondering how this will impact home ownership, here are the basics on this type of bankruptcy and what it may mean for you.

What Is Chapter 7?

While a Chapter 13 bankruptcy is the kind of financial situation that requires debt repayment, Chapter 7 is different in that it involves the liquidation of an individual’s personal assets to pay back the debt that is owed. A trustee will be designated to take care of the bankruptcy process, but a Chapter 7 bankruptcy will remain on your credit report for 10 years and have a negative impact on your credit score, which can mean increased interest rates on a mortgage down the road.

Re-Building Your Credit Score

The most important step to obtaining a mortgage following a Chapter 7 bankruptcy is keeping on top of your credit. Because your credit score will be lowered and bankruptcy will remain on your report for a long time, paying all of your bills on time in full and ensuring every aspect of your financial health is in check is of primary importance. Since most lenders will not even consider your application if you’re delinquent with payments, impeccable form is necessary in this case.

The Timeline On A Mortgage

According to the Federal Housing Administration (FHA), anyone applying for a mortgage must wait a minimum of two years after the discharge date of their Chapter 7 bankruptcy, which is the date they are cleared of obligation to their debt. While this is good news for those who want to apply for a mortgage in the near future, it’s important that a good credit history is developed and all FHA requirements are met to ensure approval.

Filing for Chapter 7 bankruptcy can be a hard financial pill to swallow, but by keeping your credit history in check for the duration of the 2-year period, you can be well on your way to a mortgage approval. If you’re planning on being on the market for a home in the near future, contact your trusted mortgage professional for more information about opportunities in your community.

09
Aug
By support
Home Mortgage Tips

Leveraging LPMI: The Pros and Cons of Lender-Paid Mortgage Insurance

Leveraging LPMI: The Pros and Cons of Lender-Paid Mortgage InsuranceFrom interest rates to mortgage loans, there are many things associated with applying and obtaining a mortgage that are important for new homeowners to be aware of. If you’ve heard the term Lender-Paid Mortgage Insurance (LPMI), this is when the mortgage lender pays off mortgage insurance on behalf of the homeowner. While this kind of insurance can be beneficial for some homeowners, here are some of the basics on LPMI so you can determine whether or not it will work for you.

It Can Be Tax Deductible

While a homebuyer generally has to be in a position of good credit in order to utilize LPMI, it is also the case that it is more beneficial for those in a higher income bracket. Because of the higher interest rate that is associated with this insurance, there is often the benefit of a more sizeable deduction when tax time comes. However, those with a lower salary may be able to deduct their Private Mortgage Insurance (PMI) without even utilizing the costlier option of LPMI.

The Length Of Your Loan

Because of the higher interest rate associated with an LPMI loan, utilizing this option is generally only a good idea for those who are planning on paying their loan off in a shorter period of time. While other types of insurance will allow you to cancel the premiums once you’ve paid enough down on your home, LPMI works differently and will be in place until the entire loan amount is paid off in full. For streamlining payments, it’s ideal, but only if you have an end date in mind.

Do You Have Good Credit?

Due to the higher costs that are associated with LPMI, there’s a good chance that those who are not in the best financial standing will not even be eligible for this insurance option. While those who have a low debt load and a good credit score may be able to acquire this type of insurance, LPMI will not be feasible for the less financially sound.

While Lender-Paid Mortgage Insurance can be a good option for those who have a good credit score and are high income earners, it’s important to be aware of all of your options before you decide what type of insurance will work best for you. If you’re currently on the market for a home and are looking into mortgage options in your area, contact your local mortgage professional for more information.

04
Aug
By support
Home Mortgage Tips

3 Different Types of Loan That Will Negatively Impact Your Ability to Get a Mortgage

3 Different Types of Loan That Will Negatively Impact Your Ability to Get a MortgageA good credit rating is built on a number of financial factors including paying your bills on time and the length of your credit history, but loans can also be a source of bolstering your credit score in a positive way. While this means that loans can actually be a good thing, there are also the kinds of loans that can have a damaging impact on acquiring a mortgage. If you’ll soon be pursuing your own home purchase, here are some loans that may have a negative impact.

Borrowing For Education

When you are young, student loans are an ideal means of paying down your debt and developing a positive credit history. However, if these loans are left to linger they can have a marked effect on your chances of a mortgage approval. Since paying back your student loans will be one of the first times in your financial life that you’ll be able to prove your reliability, you should ensure you pay them on a consistent basis in order to lower your overall debt-to-income ratio.

Credit Card Debt

Many people don’t think of the purchases that go on their credit card as loans, but the money on your credit card does not really belong to you until it’s paid off. While credit cards can be a great boon for establishing your credit in the early days, if you rack up a lot of credit card debt and do not pay your minimum payments by the due date, it will cause a considerable dip in your credit score. In addition, taking on too many cards can be a negative signal to lenders.

Payday Loans

In recent years, payday loans have sometimes been broken out separately from other loans on a person’s credit report. However, unlike many other types of loans, payday loans can be seen in a bad light by lenders because they can be indicative of someone who’s experienced significant financial setbacks, which would negatively impact their ability to pay a mortgage. While some mortgage lenders will not decline an application due to payday loans, some have already started to take this step.

Acquiring loans can be a good means of developing a credit history, but there are types of loans that may look bad on your mortgage application and won’t be of service if you can’t pay them off consistently. If you’re considering submitting a mortgage application, contact your local mortgage professional for more information.