Life doesn’t always go as planned. Unexpected things like job losses, medical bills, and other challenging situations can completely disrupt your credit. If you’re experiencing the aftermath of a foreclosure, bankruptcy, or short sale, you might feel homeownership is out of reach for good. Luckily, it doesn’t have to be.
At Homespring Mortgage, we believe in second chances. That’s why we offer recent credit event loans—a mortgage option designed to help people get back on their feet and into a home, even after a financial setback. In this blog, we’ll explore recent credit event loans, who they’re for, and how they can help you make homeownership a reality again.
What Exactly is a Recent Credit Event Loan?
A recent credit event loan is a mortgage program available for people whose credit has taken a significant hit—like bankruptcy, foreclosure, a short sale, or a deed-in-lieu of foreclosure. These events can damage your credit, making getting approved for a traditional loan challenging. Recent credit event loans, however, allow you to qualify for a home loan despite going through one of these challenging situations.
What Kinds of “Credit Events” Qualify?
Below, we’ll explore some of the most common credit events that could qualify you for this kind of loan:
- Bankruptcy (Chapter 7 or Chapter 13)
- Foreclosure
- Deed-in-lieu of foreclosure (when you voluntarily give up your home to the lender)
- Short sale (when you sell your home for less than what you owe)
If any of the above events have happened in your past, you might feel discouraged, believing it will be years before you can repurchase a home. However, recent credit event loans can open the door to a home purchase sooner than you might think.
How Do You Qualify for a Recent Credit Event Loan?
So, how does the recent credit event process work? Luckily, it’s not quite as complicated as you might expect. To qualify for a recent credit event loan, lenders like Homespring Mortgage will typically look at a few key points, including:
- Time Since the Event: The waiting periods vary depending on the type of credit event. For example:
- Bankruptcy: You’ll usually need to wait 2-4 years.
- Foreclosure: Typically, the waiting period is 3-7 years.
- Short Sale or Deed-in-Lieu: 2-4 years is pretty standard
These waiting periods help ensure you’ve had time to recover and rebuild your credit.
- Your Credit Score: Your score probably took a hit after whatever credit event you’ve experienced, but that doesn’t mean you’re automatically out of luck. Many recent credit event loans are more lenient on credit scores, so you could still qualify even if your score isn’t perfect. That said, the better your credit looks post-event, the better your chances.
- Financial Stability: Lenders want to see you’re back on solid financial ground. If you’ve been working steadily, keeping up with your bills, and making progress on any outstanding debts, that’ll help prove you’re ready for homeownership again.
- Down Payment: In most cases, you’ll need a larger down payment (like 10-20%) to offset the higher risk. But the more you can put down, the better your chances of getting approved.
Why Consider a Recent Credit Event Loan?
Simply put, these loans give you a way back into the housing market. Whether you’ve been through bankruptcy or lost your home in foreclosure, a recent credit event loan helps you rebuild your life and start fresh with a new mortgage. Here are some of the benefits:
- Get Back Into a Home Sooner: Why wait 7+ years to buy a home when you could secure your dream home in just a few years? Recent credit event loans can shorten the path to homeownership.
- Flexibility with Underwriting: Lenders take a more flexible approach when you’ve had a credit event. That means they may overlook a few things that could otherwise disqualify you from traditional home loans.
- Rebuild Your Credit: A mortgage is one of the best ways to rebuild your credit over time. If you’ve been making timely payments on other debts, adding a home loan to your credit profile can help improve your credit score even further.
- Competitive Rates: While the rates might be slightly higher than conventional loans, they’re often still pretty competitive, especially if you’ve tried to improve your financial situation following your credit event.
How Homespring Mortgage Can Help You
None of us are strangers to how challenging it can be to bounce back after a financial setback. We aim to make securing a home loan as simple and stress-free as possible.
We’ll work with you every step of the way to understand your situation, explore your loan options, and find the right fit for your unique needs. Whether it’s a recent credit event loan or another mortgage program, we’re here to help you navigate the journey to homeownership confidently.
Is a Recent Credit Event Loan Right for You? Contact Homespring Mortgage in Charleston, SC, Today
Just because you’ve faced a significant financial setback doesn’t mean homeownership is out of reach forever. You can get back on track with the proper support and a little patience. At Homespring Mortgage, our dedicated Charleston lender team is here to help you do just that.
Ready to explore your options? Contact Homespring Mortgage to learn how our local team can help you get back into the home of your dreams, even after a major credit event.