By David Wakefield, Loan Officer, PrimeLending
Builders are faced each day in deciding which contracts to accept. With all of the challenges that that many of have seen since the “Great Recession” that began in the mid 2000’s, we’ve seen an increase in Short sales, Foreclosures and Bankruptcies. In this article we will turn our focus to Bankruptcies.
Local builder, Jerry Dean with Mercedes Premier Homes had this to say: “We’ve certainly seen an increase of clients that have had financing challenges over the last five to eight years but we are still finding ways to get those clients into houses ... in some cases, it is simply taking a little extra patience and hand holding by our site agents and mortgage lender.”
Potential Home Buyers may have seen filing bankruptcy as the only viable option because they have more money going out each month than coming in. The challenge however is that with filing for bankruptcy, that buyer typically won’t be able to purchase a new home for at least two years.
Melissa McLaughlin, real estate broker with McAllen, said, “There are still a number of clients whose credit was not impacted during the recession; however, before we get too far in the home search, it is imperative that my potential buyers speak to my mortgage lender. We all need the peace of mind before writing a contract on an existing home or one being built.”
When Realtors and site agents begin their initial conversation, it is advisable to have their prospects speak to a qualified mortgage professional as an experienced loan officer can objectively look at their finances and help them determine what options are available now or in the future.
Conventional, FHA, VA, USDA, Jumbo and Specialty loan products have different views on when you can buy after a bankruptcy. The timeline will be determined by a number of factors such as the loan to value, credit scores, credit established after the bankruptcy as well as what caused the bankruptcy.
While it does take time, there is definitely life (and credit) after bankruptcy for potential buyers. Builders will keep building and buyers will keep buying … some may just need to wait a little longer!