How to Buy a Home After Bankruptcy or Foreclosure

Front Range Real Estate Podcast with Joan Pratt

Do you know how foreclosures and bankruptcies affect your credit and your ability to buy property?
I'm joined by Jennifer Thompson to discuss the breakdown of your FICO score and how these situations affect your ability to get a home loan. Here's how the FICO score breaks down:

1. Payment history: 35%
2. Amount owed: 30%
3. Length of credit history: 15%
4. New credit: 10%
5. Type of credit: 10%

People can get still get loans if they've had a bankruptcy or foreclosure; there's just a time period they have to wait out. A lot of people were hit hard by the terrible market, so this affects a lot of people.
Depending on the type of loan you're seeking, the waiting period varies. Talking to a qualified lender is the best way to find out which timeframe applies to your unique situation.
People in this situation commonly seek an FHA loan since it requires minimal down payment. For an FHA loan, there is a minimum waiting period of three years after foreclosure - which includes short sales. There is a two-year waiting period for bankruptcy from the date of the discharge for Chapter 7 bankruptcy.

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You can still get a loan after bankruptcy, but there will be a waiting period.

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If it's a Chapter 13 bankruptcy, though, as long as you have a 12-month history of paying back the bankruptcy, you can still get a loan while you're in Chapter 13, since the courts state that it's okay for you to take on new debt.
If you have more specific questions about seeking financing after bankruptcy or foreclosure, you can call Jennifer at [phone].
As always, contact me with any questions about the Denver real estate market. I'm always happy to help!