Home Loan After Bankruptcy Questions And Answers

By Kathy Davis.

If you are trying to get approved for home loans a bankruptcy can be a big determining factor in whether or not you get approval. Bankruptcy weighs heavily on several different aspects of this loan process but by knowing what is to come ahead of time you can effectively increase your chances of getting approved rather than denied.

Typically, a mortgage loan company will require you to wait a specific amount of time after your bankruptcy has been discharged before you can getting approval consideration. The specific type of bankruptcy you filed for will be the biggest determining factor s to how long you will have to wait. Chapter 7, fr instance, usually requires you to wait about 2 years before you can get a loan approved. Some lenders may even want you to wait for 4 or more years before they give you consideration.

For Chapter 13 bankruptcy the waiting period may be the same in most cases, but an FHA loan can actually provide you with a way to finance a piece of property while you´re still in bankruptcy. Your filing date will be taken into consideration when they are determining your waiting period. In some cases you might be able to get approved after only one year if you can get approved by your trustee to add a new debt. It is impossible to get approved without this advanced approval from your trustee however.

The biggest problem most people encounter is the fact the lenders usually require you to reestablish your credit first. You can not have any negative accounts on your report since your bankruptcy either.

To firmly reestablish your credit you will need to work on getting things like a car loan and a few credit cards that you can keep below 10% of the credit limit. Any home loan will require you to have reestablished your credit before they will even consider approving a loan.

If you want to avoid this you can go with a non-traditional home loan bu be prepared to pay a very big down payment and high interest rates when compared to conventional loans. This is what makes them less appealing and worth the wait for the traditional loan because they will cost you so much.

Bankruptcy does not mean you will never get approved for a loan again, but you do have to show these loan companies that it is a one time thing and you are doing better now. Good credit is very important and shows how reliable you are at paying your debts after you got help.

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