If you have a history of filing bankruptcy, foreclosure, short sales and collections/charge off, does it mean you will never be able to get a home loan? Not necessary. Different lenders have different seasoning requirements (meaning the elapse time of these incidence from the time of application). As long as you meet the specific bank’s seasoning requirement and your credit report shows that have made an effort on re-establishing your credit history, you still have a shot.
For example, you filed for a Ch.7 bankruptcy 2 years ago due to illness and was unable to work. Since then, you have limited the amount of credit usage; you make all of your other payments on time; you make an effort to repay your collections and charge-offs; and you have a stable job since then, most lenders still will move forward on your home loans with a detailed of explanation. This letter of explanation can “make” or “break” your deal. If your explanation on a bankruptcy is a situation that is still ongoing (in this example, if you tell the bank “yes i am still sick”, the lenders might not lend you the money. The point is, most banks understand that things happen. People get sick, got laid off, divorce and is having a hard time paying bills on their own, etc. However, if you tell the lender that you are still in the same situation that cause you to fall behind on your bills, then what is the point for them to lend you the money, right?
If you have any question about how to re-establish credit, feel free to drop me a line.