Let’s talk about different credit issues and what they mean when applying for a mortgage.   

Bankruptcy:

If you have ever had a situation in life which all of us experience at one time or another bankruptcy may have been your only option. What does this mean when wanting to apply for a new mortgage?  If you have filed a bankruptcy and want to buy a home with less than 20% down you will need to be discharged from Bankruptcy for a minimum of two years and have re-established credit such as a credit card or line of credit after you have been discharged going for two years also. These are most lenders guidelines for post-bankruptcy and applying for a new mortgage. The reason being is they want to see you have re-established credit with good repayment history.  

Life happens and that is ok what we need to show the lender with the 2 year discharged and 2 year revolving re-established credit is that you have now came out of the bad time of life and everything is back on track. If you get an installment loan such as a vehicle loan it does not hurt however a credit card or line of credit which is called revolving is what they want to see as these types of credit require you to pay them monthly so it shows good character and the ability to remember to pay them. Down payment should be own resources also to show strength that you came out of the bad situation in life, paid off your bankruptcy obligations and re-established credit and saved down payment. At this point the lenders see it as you have come out of the bad situation and are now ready for home ownership.  

Now if you are putting down 25% with a B lender you can be discharged from bankruptcy and get into a home a lot quicker however the rate and down payment will be higher. Call me to discuss our lending options to see if this is a fit for you.  

Foreclosure:

is when a home and mortgage is involved these are harder to get approved compared to a bankruptcy as there was a home and mortgage involved. These usually take 4 years discharged and 4 years re-established credit with an A lender and be prepared to put 10% down on your new home, this is not always the case but it may be required to add strength to the deal. It is a lot harder to convince a lender and the insurer that it will not happen again when a mortgage and home is involved on the bankruptcy. Putting down 10% percent and allowing 4 years between being discharged and buying a home again helps mitigate the concerns and risks involved with relending on a mortgage again.  

Consumer Proposals or Debt consolidation:

Like a bankruptcy we need to show re-established credit with less than 20% down we can do this similar to a post-bankruptcy however we can do this with 1 year discharged and 1 year 2 trade lines re-established. As mentioned above revolving so a line of credit or credit card is the credit that the lenders and insurers CMHC want to see, this is stronger than a vehicle loan which is called and installment loan. Although a consumer proposal is similar to a bankruptcy it is not treated as bad as a bankruptcy so less time is needed to get a home and show credit worthiness and that your past situation is just that a thing of the past.  

Judgements:

are not as bad as a consumer proposal or a bankruptcy but they are the next level down from consumer proposals or debt consolidation. When a judgement is required to make you pay a debt lenders need a good explanation of what happened as life does happen so my job is to get the situation explained to me and then I need to explain it to the lender and explain how life situations are now changed and you are ready for homeownership. As long as we can show the debt is paid and the judgement is now closed and paid in full or settled with a good explanation we can get you into a home without having to wait a year or 2 years such as a consumer proposal or a bankruptcy.  

Collections: 

are a step under Judgements and with showing the collections paid and explaining why it went to collections and where you are today we can get you a mortgage as long as everything else on the deal is strong such as down payment partial or all own resources, good job tenure and stability, good income and stable file all around.  A collections is a lot easier to work around then a judgement or consumer proposal.  

Late payments:

are the less of all the credit addressed above and again with a good explanation and not a lot of late payments or at least not a lot of current late payments within the year prior to buying a home getting a mortgage should not be an issue. You should have a minimum of 2 revolving trade lines to show good repayment history and if you have a lot of late payments in the past on those revolving trade lines it would not hurt to get a few more credit cards or lines of credits to get new trade lines going with no late payments on them.  Keep in mind if you are opening up new revolving trade lines to have no late payments show on them you would need at least 8 months of them running to count towards positive new credit.  

Call Jodi today to discuss your credit issues and ask any questions to allow me to help you get into a new home. I am always available and credit coach clients to obtain a mortgage even if it is a year or 2 away. I do not believe in the word NO, rather we will coach you into getting your new home. Call the team at Whalen Mortgages today to speak to one of our Mortgage experts in Fort McMurray.  780-715-7533