Homeownership is a dream for most Americans, but for those who have struggled so much with debt that they ended up filing for bankruptcy, there is a fear that it’s a dream that will never come true. The good news is that even if you have a bankruptcy on your record you will eventually be able to purchase a home, and if you take the right steps you may be able to do so faster than you think!
The most important determination of your ability to pursue home ownership after filing for bankruptcy has to do with the type of bankruptcy for which you file. If you’ve filed for a Chapter 7 bankruptcy that wipes away all of your debts, it is going to take at least four years for you to be able to qualify for a conventional loan, but you may be able to get a government-backed mortgage from the VA, FHA or USDA sooner. If you file for a Chapter 13 bankruptcy that reorganizes your debts, you will be able to hold onto your assets and may even be able to ask the court for permission to apply for a new loan based on your adherence to your payment schedule. Otherwise, you may have to wait at least four years from your filing date and two years from your dismissal date.
Though you may find it difficult to qualify for a mortgage loan after a bankruptcy after the waiting period has passed, there are some loans that are easier to qualify for than others. FHA loans have more forgiving requirements and lower credit score thresholds as well as shorter waiting periods than other loans.
To apply for a loan after bankruptcy, your best bet is to work towards reestablishing your credit via a secured credit card. By putting a deposit down, you will be able to have access to a credit card and then prove your creditworthiness by paying your bills in a timely way. Another positive step is to pay down any debt that you have remaining after your bankruptcy closes. Perhaps one of the most important and simplest steps you can take towards qualifying for a mortgage after a bankruptcy is to make a personal plea to the lending institution. Though it may sound too simple to believe, by writing a personal letter of explanation explaining the circumstances leading to your bankruptcy and the steps you’ve taken to resolve the situation may go a long way towards being trusted with a new loan.
For more guidance on how a Chapter 7 or Chapter 13 filing will impact you and your future plans, contact our experienced bankruptcy attorneys today.
