How long to wait post BK to get best home loan?

[mixxalot]

I have a year after my Ch7 discharge. Current saving for down payment on new condo.

How long to wait after a BK to get a good rate on mortgage loan? My uncle says lenders prefer 3-4 years after a discharge to show stable income and new credit rebuild to boost FICO for a mortgage loan at best rates.

With housing bubble in southern California causing prices to decline on homes and tightening of credit lending with subprime brokers going out of business, this is ok with me to get best price on both the loan and a new condo.

Just wondering how long it really takes to get a FICO up to 800+ after a discharge? How long do lenders (banks, credit unions) want to see you for a good rate after a BK?

[HHM]

Minimum time is two years from discharge, regardless of what your score is, you will be considered a sub-prime borrower for mortgage purposes within 2 years after after discharge.

Getting a score over 800 after BK is virtually impossible, but you don't need a score over 800 to get the best rates. The best rates are generally available to those with 740 and above (and sometimes 720 and above). The reason you generally can't go above 800 after BK (it's not impossible, but highly unlikely) is that a chapter 7 essentially restarts your credit history, so it can take you 10-20 years to re-establish enough of a credit history to get above 800. Also, a lot depends on what your credit looked like before you filed. If you went into BK with a score below 600, you will never see an 800 score.

But as for mortgages, you really should wait at least 2 years from discharge to start shopping for mortgages, anything less, and you will get very bad deals that will be difficult to refinance out of in the future.

[mixxalot]

Thanks for the tips

I will wait a few years to shop for a new home loan. With sub-prime market tanking it will require more time to save for the down payment and rebuild credit.

[MTG_BANKER_OH]

I will wait a few years to shop for a new home loan. With sub-prime market tanking it will require more time to save for the down payment and rebuild credit.

Currently it is best to wait 2 years after the discharge. The subprime market is in trouble and they are tightening up all of their guidelines for lending. It is very tough to get a 800 score I have been in the business 5+ years and have only seen a handfull of them. Typically 680 gets you the best programs and then 700 and over 720 the programs to not typically get any better.

[SinkingFast]

Another thing that figures into your FICO scoring Mix, is the BK. Yeah, right! Like you didn't already know that??!!

If you'd never filed BK, you'd be lumped together in that group of people. And your Scores would be reflective of how your credit compares with that group.

But you have filed BK,............ So,............. That moves you into a whole different group. And your Scores are reflective of the group you're currently in. Higher scores are reflective of more time elapsed since the BK and/or better handling of Credit since the BK.

Once the BK drops off your public records,.............. You change groups again. You are placed back out into the main stream population as if you'd never filed BK. It's kinda like graduating High School and becoming a Freshman in college. You go from being the Big Man on Campus to the bottom of the heap again.

Something to keep in mind when that time comes down the road. When you get to the time where your BK is gonna drop off your public records, you might actually see a drop in your scores.