Getting A Mortgage in Denver With A Chapter 7 Bankruptcy -

“Pointers” and “Things” You Need to Know

If you have had a Chapter 7 Bankruptcy and have been considering refinancing a current mortgage or purchasing a new home, here are a few pointers and things you need to know.

First off, it’s very important to know the wait period from the discharge date. 

If you are thinking of conventional lending, the waiting period for getting a mortgage loan after the discharge date of the Chapter 7 Bankruptcy is 4 years. However, if the bankruptcy was due to extenuating circumstances beyond your control, the waiting period can be as little as 2 years. Two examples of extenuating circumstances might be the death of a spouse or a severe accident with large medical bills and a lengthy recovery period. 

On the other hand, if you are considering obtaining FHA or VA financing in Denver, the waiting period is just 2 years from the discharge date. If it was due to extenuating circumstances, it could be just 1 year. 

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A few Things You Need To know:

• You will need to reestablish your credit after the bankruptcy. When applying for a mortgage loan, the last 12 months on your credit report will be scrutinized for any delinquency, collections, or judgments. Anything derogatory and your loan could be in jeopardy. Again, your credit report must show you have been using credit and have paid it on time.
• Keep your bankruptcy paperwork in order; it should be placed in a secure and easy-to-find place. Once the process begins, more than likely, your bankruptcy paperwork will need to be reviewed.
• Often, you are asked to provide a letter of explanation for the reason for the bankruptcy and what you have done to correct the issue to keep it from happening again.
• If your bankruptcy was due to extenuating circumstances beyond your control, you must provide proof of that. For example, if your ex-spouse was a drug-addicted heroin addict who went missing for 30 days, zeroed out your bank account, and jacked up your credit cards, you will need police reports, lawyer letters, bank and credit card statements.