Qualification Repair: Overcoming a Bankruptcy or Foreclosure In Your History

October 14, 2011

If you have a bankruptcy or foreclosure in your recent history, you cannot find a mortgage from mainstream sources. There may be some “hard-money” lenders who will deal with you but their price and down payment requirements will be very high. Otherwise, your only option is to wait for the system to forgive you.

Meanwhile, there are two things you should do while you are waiting. One is to rebuild your credit. While that takes time, the passage of time alone doesn’t do it. You must generate favorable credit information for your file that will gradually outweigh the bad information. Read Are Credit Problems Cured by the Passage of Time?

The second thing you should do is to document the reasons why you were forced into bankruptcy or foreclosure. If you can persuade that there were “extenuating circumstances” that are unlikely to be repeated, you can take a year off the period you have to wait to become eligible. Read How Forgiving Is the Mortgage System?

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