Can I Buy a Home After Filing Bankruptcy If I Have a Cosigner?
After going through a bankruptcy, you might feel ready to jump back into the game after getting a "fresh start," but you have to deal with your terrible credit. It usually takes bankrupt individuals 10 to 20 years to catch up with their peers financially, according to Ohio State University's Center for Human Resource Research. Cosigners are meant to help an unqualified individual get a home, but this may or may not help a bankrupt person.
Other People Are Reading
-
Identification
-
If you have just emerged from bankruptcy, a cosigner could help you qualify for a mortgage, but you cannot rely only on the cosigner's creditworthiness, suggests MortgageLoan.com. You are the primary account holder and first in line to pay. At the very least, you can try to get a mortgage and see what the loan officer thinks of your situation.
Why You Cannot Rely on a Cosigner
-
No matter how much your cosigner makes, you must qualify for most mortgages based on your own debt-to-income ratio (DTI). A DTI usually just includes other loans, such as a mortgage or auto loan, and not grocery bills or utilities. In the mortgage industry, a DTI of 33 percent or less is a standard requirement for a loan. Considering you came out of bankruptcy, there is a good chance you have wiped out all or at least a significant portion of your debt. The cosigner can make up for your likely awful credit rating.
-
Other Considerations
-
The Federal Housing Administration (FHA) might consider your application for a home loan during a Chapter 13 bankruptcy if you have at least 12 months of good payments, a stable job and a FICO score of at least 500, as of 2010. If you filed Chapter 7, the FHA requires a two-year wait with the same requirements as a Chapter 13. In either case, you must explain why you went into bankruptcy.
Tip
-
Should you fail to find a lender willing to accept your cosigner to approve a mortgage, it is not out of the realm of possibility to have excellent credit within two to four years of completing your bankruptcy case. Pay your bills when due and use credit. Most individuals coming out of bankruptcy probably only qualify for a secured card backed by a deposit, but at least this account reports to the credit agencies.
-
References
- Ohio State University; After Bankruptcy, Americans Need 10 to 20 Years to Recover; Jeff Grabmeier
- MortgageLoan.com; Can a Cosigner Help You Qualify for a Mortgage?; Kirk Haverkamp
- Bills.com; Mortgage Cosigner; April 2010
- FHA.com: FHA Requirements: Credit Guidelines
- FHA Info: FHA Credit Guidelines
- MSN Money; Bounce Back Fast After Bankruptcy; Liz Pulliam Weston; February 2009
- Photo Credit signing a contract image by William Berry from Fotolia.com
