Real Estate
October 14, 2019
link to facebook link to twitter
More Stories
What to expect in today’s loan process? How to use rental income to qualify for a mortgage How to plan the optimal time to buy a rental property The loan process and what not to do Why waiting for mortgage rates to get better is a losing proposition A factor that can drive your mortgage cost up How child support and alimony can affect your ability to get a mortgage What to look for when getting a mortgage on a manufactured home Why getting a 30-year fixed-rate mortgage is a smart financial move How to lower your cash to close when buying a home What you need to know about securing a VA mortgage How mortgage lender credits work Five quirky refinance scenarios that work Two mortgage loan programs get a better interest rate The #1 mistake consumers make when getting a mortgage… Things that affect your first-time buyer mortgage options Be wary about paying off this type of mortgage Best benefit for your first-time home buyer Why the VA mortgage is the best home loan A bank statement program might help get a mortgage Read the fine print Cash-out refinance or home equity Should you refinance with today’s mortgage rates? Should you buy and build or buy a single family home? Don’t make mistakes when getting a mortgage refinance Home value when refinancing Should you go FHA or conventional for purchasing your first home? Mortgage rate sounds too good to be true Finances matter when buying a home FHA requirement might hurt buying chances How to get a mortgage without providing tax returns The new way to get a mortgage with 1 year income tax returns Four common home buying mistakes to avoid How to create wealth with your income and finances Should you buy a house with monthly mortgage insurance? 2019 conforming loan limits rise FHA loan limits for 2019 increase Working two jobs makes now easier to get a mortgage How much of your mortgage income should be going towards an auto loan? How much are closing costs when you purchase a house? Self-employed income Common questions on financed mortgaged insurance loans A loan program you may be eligible for based on your credit score Can you use roommate income to get a mortgage? Pulling credit may not make sense Cash to payment formula when buying a home Lender knows how to purchase business? How expensive your mortgage will be due to bad credit? A non-traditional program for self-employed mortgage borrowers What you need to know about the mortgage 4506-t document Two mortgage process problems you will want to avoid How the mortgage process gets ugly if you have a difficult picture Could the 30-year fixed mortgage get to 3 percent? Purchase price should not be most important factor Three reasons you should not buy a home Three quirky issues that will hurt your mortgage Why your mortgage payment keeps changing The credit score it takes to get a mortgage How 1031 tax-deferred exchanges work Six to avoid when purchasing a home Mortgage inquiry makes your credit score drop? Transfer property to family and be protected under Prop 13

Be careful getting a mortgage if you have a bankruptcy

By: Scott Sheldon
May 31, 2019

A bankruptcy can possibly be a detrimental blow to your mortgage chances if it’s not handled in the right way. Following is what you should take into consideration if you have a bankruptcy in your past or will be filing an upcoming bankruptcy…

First things first for our purposes we are discussing a Chapter 7 bankruptcy which is the full stripping of all your personal obligations. Contrary to popular belief you cannot discharge a mortgage. The mortgage loan tied to your primary home cannot be discharged in bankruptcy court.

If you are filing an upcoming bankruptcy but it is not yet being filed, do the mortgage first. Even if you must pay a premium such as private mortgage insurance on an FHA loan, for example, that is a far better opportunity than having to wait potentially two years which otherwise would be the outcome on an FHA loan anyway after the bankruptcy discharge date.

If you have a bankruptcy in your past this is where things can become potentially problematic. Let’s say you have a mortgage on your primary home and you’ve successfully discharged bankruptcy and you’ve now passed the two-year waiting mark. That mortgage that you had, assuming it’s with an institutional lender, no longer reports on your credit report. You still have the obligation to pay the payment each month, but it doesn’t report on your credit report. The credit company reports any payment history. 

The bank does not report on your credit report after a Chapter 7. As a result the lender does not initially have your payment history which means that it’s super critical to continue to make your mortgage payments on time. If you have any mortgage that is late in the last 12 months, 30 days overdue or more, getting a loan is going to be extremely tedious and it may not close escrow. You must have at least a 12-month clean payment history for getting a mortgage with an exception on one 30-day mortgage late in the last 12 months.

In other words, when you’re going through the bankruptcy process make sure that if you are going to be doing any type of home financing mortgaging in the future that you will have a 12-month clean payment history and that you know what date the payment is due and you put it on autopilot so you don’t miss any payments.

Payment history when there is a bankruptcy in the past becomes even more financially crucial because the lender is judging your future ability to make payments going forward and the only way they can do that is based on your previous history. Keep that in mind next time you’re looking for mortgage financing.

Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes second homes and investment properties. Learn more at www.sonomacountymortgages.com.