Home Mortgage After Bankruptcy Is Possible – And Fairly Soon
If you’re like many people, you may think that you can’t get a home mortgage after bankruptcy proceedings start or that you have to wait years and years before you can do it.
That’s not the case. You can get a home mortgage after bankruptcy, even the day after, if you are willing to pay the price.
The rate of your first home mortgage after bankruptcy depends on you to a large extent.
What the current mortgage rates when you are ready to get another mortgage is the other main factor. Just felt I had to say it.
There are several things you can do to get a decent mortgage after bankruptcy sooner.
But first, two facts:
- If you filed Chapter 7, you can refinance a mortgage or buy a new home the day after your bankruptcy is discharged.
- If you filed Chapter 13, you can refinance a mortgage or buy a new home 6 months after the filing date. (There are many mortgage loan programs that will pay off the balance remaining on your Chapter 13.)
Home Mortgage After Bankruptcy Options
The best home mortgage after bankruptcy option is an FHA mortgage loan. You can get one as soon as you have 12 consecutive months of timely payments if you filed Chapter 13 (24 months if you filed Chapter 7).
The 4 Actions You Can Take to Shorten the Time to Decent Home Mortgage After Bankruptcy:
1. Get a hold of your credit report and make sure there are no errors (like debts eliminated by the bankruptcy still showing in collection).
2. Get new credit. You will need two types:
| a. Installment credit such as car, furniture, electronics loans, mortgage loans (Since your interest rate is going to be high, you’re better off with something small). | |
| b. Revolving credit, like credit cards or home equity lines of credit. And it’s light, regular use of your cards that helps build credit. So don’t charge more than about one third, preferably stay at a quarter, and pay in full at the end of the month. |
3. Secured cards will be easier to get. Get one that has no application fee, low annual fees, reports to all three major credit bureaus, converts to an unsecured card after a while. You can obtain a major credit card. Why? Lenders understand what bankruptcies do and that you cannot file again for years (6 for Chapter 13, 7 for Chapter 7).
4. Pay bills on time every time. Different lenders have different grace periods, and different number of days before they resort to collection agencies. If they report to credit bureaus, they all report if you’re late 30 days. The best thing to do is to make sure your creditors receive the payment before the due date.
Make sure credit reporting agencies don’t report mistakes (like accounts that were wiped out by the bankruptcy being reported as being in collection).
How long does it take till you can get a home mortgage after bankruptcy with most lenders? Two years. Most lenders will want to see two years of new, good credit history.
However, a home mortgage after bankruptcy happens a lot faster with FHA, as soon as 12 months.
Bankruptcies are depressing as hell, I know. But ‘home mortgage after bankruptcy’ is not just words people use to search in Google.