Mortgage? How Soon After Filing for Bankruptcy?
A common question we get is, how long after bankrptcy until I can get a mortgage? The answer to that question, like any legal question, is the standard "it depends," but the answer is generally, sooner than you think. While there is a waiting period for most types of mortgages or home loans after bankruptcy (except for chapter 13 bankruptcy), those waiting periods are short. Whether or not you can get that home loan, post-petition (or post-bankruptcy) will depend on what you're doing after your case is over.
FHA Loans and Chapter 7
If you filed a chapter 7 bankruptcy case and received a discharge, you will have to wait 2 years after you receive your discharge until you can apply for an FHA loan. Remember, FHA does not provide the loan, they guarantee the loan, and it is banks who are actually making the loan. The banks may make their seperate qualifications (some banks are shorter, and some banks are longer), but for you loan to be backed by FHA, the wait is 2 years.
Private Loans and Chapter 7
The waiting period for a conventional loan after chapter 7 realy depends on waht the lender is comfortable with. Generally, the creditor will look at what you have done post-petition to decide if they want to lend you the money for a home. Other factors will apply such as down payment. Any lender is more comfortable giving you money if you put them in a better equity position at the beginning of the loan. So making a bigger down payment will help you with a mortgage sooner than later.
Chapter 13 and Mortgages
Chapter 13 is completely differnt than chapter 7, because you don't have a waiting period after a chapter 13 bankruptcy is over to qualify for a loan. It is because the debtor is making payments over a period of time that the debtor may qualify for a mortgage right after bankruptcy. Debtors can even qualify for new mortgage loans during their chapter 13 bankruptcy. As you make payments in your chapter 13 plan, the bankruptcy trustee is paying off debt, and your credit is getting better and better as a result. Many debtors will find they qualify for a mortgage loan during their bankruptcy, or immediately after.
Bankruptcy is a Great Way to Qualify for a Mortgage Sooner.
In many situations that we encounter, a borrower would not have qualified for a mortage loan for way over 2 years, had they not filed bankruptcy. The reasons are generally because their debt to income ration is out of control, and bankruptcy eliminates this factor. Bankruptcy can clean up an individual's financial situation substantially, allowing them to qualify for a mortgages quicker than had they not filed.
If you have questions about bankruptcy, mortgages after bankruptcy, or need help with your financial situation, please don't hesitate to call us at 480-355-1377. Our experienced bankruptcy attorneys have seen almost every financial challenge there is and are ready to assist you.