Qualifying for a mortgage during or after a bankruptcy
Better Credit…Better Options
Can I get a mortgage after bankruptcy?
This is a concern of many people who are looking to file bankruptcy or already have bankruptcy. However, the answer is yes you can get a mortgage after a bankruptcy, but there are restrictions. It depends on what type of bankruptcy you filed, how long it has been since the bankruptcy, your credit, what type of loan you are looking to get, and many other factors as well.
How long until I can qualify for a home after a chapter 7 bankruptcy?
Keep in mind guidelines for mortgages are constantly changing. In fact, there are typically several hundred changes to guidelines each year. Before the start housing market collapse and the financial meltdown several years back it was much easier to qualify for a home and it was definitely much easier to qualify for a home after a bankruptcy. In fact, you could argue that a consumer is a much better credit risk after they have discharged a bankruptcy being that they are no longer under the burden of debt that they previously were. However, there was still the risk of the track record that led up to that consumer filing for the bankruptcy and that is why lenders and the credit scoring model want to see what a consumer does after a bankruptcy. Both the lender and the credit scoring model want to see a consumer build their credit history again after the bankruptcy to show they are a good potential risk as a borrower. FHA will issue a home loan to a borrower 2 years from their discharge date of a chapter 7 bankruptcy. There can be special circumstances that would allow you to get and FHA loan 1 year after the discharge of a bankruptcy, but typically the guidelines are that it is 2 years. Keep in mind you will have to meet all of the other criteria as well for being approved for an FHA loan. Most banks require a credit score of 640 and you will need a minimum down payment of at least 3.5%. Keep in mind guidelines are constantly changing so the best thing you can do after discharging your chapter 7 bankruptcy reestablish your credit and make all of your payments on time. It is also very important to review your credit report to make sure that the bankruptcy and all the items included in the chapter 7 bankruptcy are reporting correctly. Click here for more details on what to look for when reviewing your credit after a bankruptcy. Having errors on your credit report following a bankruptcy can be detrimental to your credit score so you want to make sure to review your report. Credit reports can be very confusing and finding errors on them can be very difficult, so if you need assistance with this it is best to have an experienced credit analyst review your credit report. The most important thing when qualifying for a mortgage is your credit report and your credit scores. When making likely the biggest financial investment you will ever make it is best to make sure you get the best terms. To do this make sure your credit does not just qualify you to obtain a home loan, but that it makes you well qualified buyer so you get the best possible rates and terms on your home loan.
Can I qualify for a buying a home while in a chapter 13 bankruptcy?
Yes, it is possible to get a mortgage while you are in a chapter 13 bankruptcy. Keep in mind guidelines are always changing, but other than the other typical guidelines for qualifying for a home if you are in a chapter 13 bankruptcy you will need to have been in the bankruptcy for at least 1 year and have all payments on time. In addition, you would need approval from the bankruptcy trustee as well to be able to purchase the home. If you are considering filing a chapter 13 bankruptcy or you are already in a chapter 13 bankruptcy then it is very important for you to monitor your credit report. Being that credit reporting is already very complex and adding a bankruptcy can sometimes make it even more complex and can lead to errors on your credit report you always want to monitor your credit report. Click here to find out what to look for on your credit report while in a chapter 13 bankruptcy or after being discharged from one.