Obtaining a Mortgage after Bankruptcy
Filing for bankruptcy is a scary thought for many people. People who have not filed for bankruptcy before tend to think bankruptcy is the end of ever being able to obtain a credit card, personal loan, car loan, or a mortgage in the future. Bankruptcy has a reputation for being a very negative thing to happen to someone, when this is certainly not the truth for many people. Bankruptcy allows individuals and companies to take control of their debt and start fresh. While bankruptcy may have an initial negative impact on your credit report and/or your credit score, you will be able to build healthy credit again after the conclusion of your bankruptcy.
The Waiting Period after Bankruptcy
If you have filed for bankruptcy, you may not be able to obtain a home loan until after the conclusion of your bankruptcy. After a certain period of time, you may qualify for a home loan as described below. There are a variety of home loans you can consider, but it is important to remember that you must meet the same requirements as others despite having been through bankruptcy, such as being creditworthy (making timely monthly payments with other credit accounts), and you must have a reliable source of income.
Different Types of Mortgages You Can Apply For
If you meet the basic qualifications for a mortgage, you may apply for the following types of home loans:
• Private/Non-Government Loan – If you wish to apply for a home loan with a private bank, you will have to wait four years after your Chapter 7 bankruptcy has been discharged, or if you filed for Chapter 13 bankruptcy, you will have to wait two years after your bankruptcy has been discharged. However, if your Chapter 13 bankruptcy was dismissed without being discharged, you will have to wait four years after the date the bankruptcy was dismissed.
• USDA Loan – You may apply for a USDA home loan three years after a Chapter 7 bankruptcy has been discharged and 12 months after making Chapter 13 monthly payments with court approval. You may also apply for a USDA home loan one year after the Chapter13 bankruptcy has been discharged.
• FHA and VA Loan – You may apply for an FHA or VA home loan two years after a Chapter 7 bankruptcy has been discharged, and if you have filed for Chapter 13 bankruptcy, you may apply for an FHA loan during the bankruptcy proceedings so long as you have made twelve months of timely and complete Chapter 13 payments, but this requires court approval. Further, when applying for an FHA or VA loan, you will have to explain the reason you filed for bankruptcy.
Regardless of what type of home loan you apply for, you should ensure you are able to make the payments if you are approved. Bankruptcy should allow you to start fresh and build credit immediately following the conclusion or discharge of your bankruptcy. While you will have to wait a certain period of time to apply, and hopefully be approved for a mortgage, it is well worth the wait as it gives you time to save money and be able to manage the monthly payments.
Contact The Law Offices of Georgette Miller and Associates, P.C. Today
Buying a house can help your credit if you are able to make your monthly mortgage payments. You can reach this goal even after bankruptcy. Consulting with a Philadelphia bankruptcy attorney will help you plan for your financial future, so that you can rebuild healthy credit. The bankruptcy attorneys of The Law Offices of Georgette Miller and Associates, P.C. are dedicated to helping businesses and individuals use bankruptcy as a positive debt-management tool. The Law Offices of Georgette Miller and Associates, P.C., provides debt-management and bankruptcy services in Philadelphia, PA, New York, New Jersey, Washington, D.C., and Wilmington, DE. Contact our office today by calling (866) 96-GMLAW to schedule an appointment with one of our bankruptcy attorneys.