Expert: Jessica Bryan - 2/28/2010

Question
I am, or will be, a first time home buyer.  I filed for bankruptcy 2 years ago but my wife has decent credit.  I make more money than she does so we need my income.  I was wondering will a mortgage company will even look at me with that bankruptcy.  I have taken all the steps I can to improve my credit from the bankruptcy.  thank you for your time.

Answer
Dear Collin;
Usually it takes a bit longer to 'clear' bankruptcy issues in order to obtain a loan.  However, it depends upon the current situation and/or reason for the bankruptcy.  Lenders are very cautious-- particularly now!  If there were some extenuating circumstances such as a previous spouse who ran up lots of debt for which you were responsible but have paid everything off...if there were medical bills...etc.  Sometimes there are very credit-worthy people who have a situation occur once in their lives but otherwise are financially responsible people.  If that is your situation, and if you can prove it to the lender and to creditors, then there is hope that you might also convince the underwriters particularly if it is a private lending institution or your own bank or credit union.  Otherwise, you will have to wait or get a D paper loan.  A lender can discuss your options and explain the various types of loans to you.  (I do have to say that even people with great credit are having difficulty getting loans right now if their circumstance is not perfect; so I wouldn't hold much hope.)  There are perhaps some creative ways to do a loan using your wife's income.  Discuss this with a lender: i.e. if you are in business for yourself; could you 'pay your wife' a salary that would bring up her income?  There are perhaps some other options but only a lender who knows the current guidelines would be able to address these.  

Best wishes,
Jessica Bryan