The purpose of a letter of explanation of a bankruptcy is to explain to a potential lender the extenuating circumstances for an unfavorable credit history. These can include loss of a job, medical problems, family member deaths and other circumstances that are unlikely to reoccur. A combination of these credible excuses sometimes help reduce the waiting period for obtaining a new mortgage after bankruptcy or foreclosure, according to Innman News.Know More
With the Federal Housing Administration, the normal waiting period for obtaining a mortgage after a Chapter 7 bankruptcy is five years. According to Innman News, a well-written letter of explanation detailing the extenuating circumstances and the individual's efforts to fix the problem that lead to the bankruptcy filing has the potential to reduce the waiting period to two years. Because lenders sometimes impose stricter limits than the federal agencies, borrowers have the burden of proof that they are worth the financial institution risking losing FHA funding due to too many foreclosures.
In the period between filing for bankruptcy and qualifying for a new mortgage, families often find themselves looking at rental properties for a place to live. The bankruptcy makes finding rentals difficult too. However, a similar letter addressed to property management companies increases the chances to get a rental property, according to Myvesta Foundation.Learn more about Credit & Lending
Not all judgments can be discharged in a Chapter 7 individual bankruptcy filing. Certain types of obligations, including some judgments resulting from them, do not go away, according to Cornell University Law School.Full Answer >
The factors that go into calculating a FICO credit score, the system used by most banks and other businesses that deal in credit, include payment history, amount of debt, length of credit history, types of credit and amount of inquiries. Special circumstances such as bankruptcy or a limited credit history also impact credit scores.Full Answer >
Since buying a home is a huge investment, a tip that can help is to make sure one has good credit history before beginning the process. Another tip is to calculate what the total costs involved will be before ever making the purchase. This should include any repairs one will have to make on the house.Full Answer >
A credit score is a way to measure a person’s credit risk based on factors from their credit history. The most common score used by businesses was developed by the Fair Isaac Company, and it is known as a FICO score. An individual’s FICO score can range from 300 to 850, with a higher number viewed as a more favorable score.Full Answer >