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Buying A Home After Bankruptcy

Buying A Home After Bankruptcy

If you have ever experienced having to go through bankruptcy then you know just how devastating it can be.  One thing that you may be wondering is if you will still be able to attain a home loan.  Also, not to mention the thought of  buying a home after bankruptcy can still be a possibility.

Bankruptcy can make your home mortgage loan approval extremely difficult, but we at Greater Mortgage Solutions can still make it possible to get you approved for a new home loan.  Not to mention bad credit does not last forever and there are loans for bad credit being accepted all the time. These type of lenders are known as Subprime lenders and they are focused on helping individuals with bad credit in attaining the home of their dreams after bankruptcy. Do keep in mind that time does have to pass after bankruptcy typically at least 1-2 years after re-establishing some credit.


There are an increasing number of people with poor credit who are searching  for home financing. Here are some extremely good ideas to consider after bankruptcy to expedite your approval for a home loan.

Increase your credit rating. By simply making regular payments on time or on a regular basis, the odds of your credit score rising is high. Once your bankruptcy has ended for some time, usually about 2-3 years, you should have an easier time qualifying for a smaller interest rate for a mortgage loan.

Owning an asset. Renting a home may be a simple way of putting a roof over your head, but you are essentially throwing your monthly payments away each month. Financially it is better to buy a home because over time, the value of your home will increase, thus working your way towards owning an asset. After some time of purchasing your dream house you may be able to consolidate any other debt that your bankruptcy might of not included, you can achieve this by attaining an equity loan.

Things To Consider After Bankruptcy

It can be extremely tempting to purchase an new home, vehicle, or to perform renovations after bankruptcy discharge since you have no debt left. Due to the financial relief that you had, you may probably feel like you can afford a larger house payment. Let me tell you that it is not that easy so I have provided some things to consider before you obligate yourself to a new mortgage payment.

The Pre-payment Penalty.  This penalty lasts about 6 months worth of house payments, and usually lasts anywhere from 2-3 years. Upon signing those mortgage documents you need to make those payments on time, on a timely basis.  Making those payments on a timely basis is crucial to prevent you from losing the house. So we suggest to have extra funds available for incidentals that you may need in the future

The Two Year Mark. After 2-3 years from the date of the bankruptcy discharge, mortgage loans will be much easier to attain. With a small down payment, you might even be able to get a mortgage loan without a pre-payment penalty. If you are close to the 2 year mark we advice to wait it and have more mortgage loan options.

Borrowing Too Much. Don’t spend more than you can afford. This mistake tends to be the most common that we usually get into. When deciding to buy a house, purchase one that you know you can afford. Avoid maxing out your credit or living on the edge of your income.

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Do You Know How Much Money You Need To Buy A Home

Buying a home is not so easy as it once was, and in the past few years since the recovery it has even gotten more expensive.   The thing is every one wants the 100 % financing deal as if they were buying a car.  Yes there are loans out there with only 1/2 % down.  But you still have closing costs.  Yes there are some sellers that will pay for most if not close to all your closing costs.

But here is the thing those scenarios are not always typical but if you have to stick to that scenario that you want a house with putting little to nothing in the process you will have to be very, very , very patient.

Because most sellers to not want to pay for all of your closings costs unless they are selling the house at a premium, but even then the house has still has to appraise in value.  Not to mention the loan that you may be trying to get is basically going to be govt. sponsored so an FHA loan or VA loan.  Sometimes the house may be in need of repairs and, so that home you want may not qualify for that loan.   Or someone may have to do the repairs and the seller may not want to so you may have to do the repairs on a home that is not even yours, and you are not guaranteed to close on the deal.  But the lender wants those repairs done period.

Bottom line is just be as prepared as possible, its better to have some funds so that you can negotiate.  Best case scenario unless you are doing a VA loan or USDA loan have 5% for the down payment.  So you can get rid of PMI anything less than that you will get with mortgage insurance.  That is as long as we talking about buying this house as your primary.  If you are doing a VA Loan or USDA loan you are in luck they do not have any PMI and which can be several hundred dollars on top of your regular mortgage payment limiting you on how much house you can qualify for.

But you should at least have 3.5 % saved up of whatever you are trying to buy, so you have some room to bargain and negotiate.  Lets say you cannot get the seller to pay for any of the closings costs or repairs.  Then apply for a FHA home loan with down payment assistant and use some of the 3.5% that you have saved up to pay for those closing costs.   The point is, save up money, I know we all like free stuff but the idea of buying a home with nothing down and no costs should not be one of them.  If you would like to see what kind of loans you can qualify for let me know.

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What Are The Steps In A Foreclosure Process

Maria asks…

How much does it cost to repossess a home?

I am contemplating investing in real estate, and am doing some research on some creative ways to get financing on a home with little to no risk. All I really want to know, is how much is it going to cost someone approximately to reposess a home if the seller is financing the mortgage and not the bank, and the buyer stops making payments for whatever reason. Whether its a percentage or a flat rate or it depends on several different variables, I’d appreciate your help.

admin answers:

The term repossess is not the term you would use upon getting the collateral put up for a mortgage loan. The term used is called foreclosure.  Repossess is something more used for lets say car loan.

There are two type of foreclosures used primarily in the United States

#1 Judicial
This would take a judge to accomplish this type foreclosure. You would appear in court with the necessary documents to prove that you would like to and have the ability to cause a foreclosure action against the current home owners.  This is a bit more expensive and not really what they do in California, but the note holder as well as the home owner making the payments can request a judicial foreclosure.

#2 Non-judicial
This type of foreclosure is typically the process that is used in California its quicker faster and less expensive, and usually the process in which you would want to do the foreclosure. The procedure has been laid out and would need to be followed to the letter of the law. Making a mistake or omitting a procedure could cause you to begin again.

There are foreclosure companies that would do this chore on your behalf. You would need to find a few local companies to find out their procedures and cost. Some would defer the cost until after the foreclosure sale, and would take their cost out of the sale proceeds. Each company would be different and not have a set cost, though would be close in price. These companies are normally not a franchise. Most would charge a flat fee and would indicate this fee upon initial consultation.

You would not need the services of an attorney as the attorney would simply refer you to a foreclosure company. Many attorneys are not set up to handle foreclosures, even those that are real estate attorneys. Foreclosure companies would have an attorney on their staff for your use and to obtain legal advice from.

Before you do any type of owner finance you would want and need the help of a doc preparation company. These companies would prepare the mortgage loan docs on your behalf based on the information you would provide as to the interest rate, terms and any conditions, such as late fees, due date and grace periods, amount financed and other information that the state you reside in would require on mortgage loan docs. There is a fee for their services,however, you might pass some of this cost to the buyer. This is also a tax deductible item from your income taxes. One company that come to mind that would prepare your loan doc on your behalf is Magic docs.

There are many books available to you at your local library or for sale on Amazon or at your local bookstore. It would be to your benefit to educate yourself as much as you are able on this subject if you plan to use this method in selling your properties.

You would also want to know about selling mortgage notes and the procedures you would have to observe in the selling as well as the purchase of mortgage notes.

I hope this has been of some benefit to you, good luck.

“Good Luck”

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