Over the years, I have been people refinance and buy homes with me, and every family has a different story, but I have seen families refinance to pay off their debt, and then they end up in the same situation they were in before. This is why I have a personal opinion about the FHA bankruptcy and credit guidelines.
FHA bankruptcy and credit guidelines were put into place to help people understand that for poor decisions there would be consequences. Every borrower needs to understand the ramifications of the decisions they made, and how they will affect their future. This isn’t to say that there are people out there that have fallen on hard times, but no matter what the situation is, you can learn from it.
The FHA bankruptcy and credit guidelines set forth waiting periods that state how long a person or family would need to wait to do an FHA loan. Bankruptcy waiting periods are two years with reestablished credit, and a good explanation of why it happened. This is a blessing that they are allowing you to borrow money, and you have to understand why they do it. They are insuring your loan and they back if when the borrower defaults, so they make the rules and we just have to abide by them.
FHA credit guidelines state that on a foreclosure, the waiting period is five years, and that is usually from the date of the sale of the property. With a good explanation this may be shortened, but there are no guarantees.
Guidelines were put in place to aid you in making decisions, and to help you know what you need to do to move forward. Unless you educate yourself on what the guidelines are, you can’t effectively plan for the future. If you fail to plan, you plan to fail.
-Mayer Dallal
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