Buying a House After Bankruptcy—Yes You Can!

Many Chicago residents have thought about filing for consumer bankruptcy but worry they’ll never be able to buy a new home.  Are you thinking about a Chapter 7 bankruptcy or a Chapter 13 bankruptcy?  You’ll be happy to know that it is indeed possible to obtain a mortgage loan after you’ve filed for bankruptcy.  While you will have to deal with a waiting period between filing for personal bankruptcy and seeking a new mortgage or refinance, there are many Americans who have been in your position and have successfully gotten a mortgage after financial setbacks.
Filing for personal bankruptcy can be an effective choice to deal with debt, and Oak Park residents often are pleased to learn that their credit can recover relatively quickly after consumer bankruptcy.  The dedicated Oak Park bankruptcy attorneys at the Emerson Law Firm have years of experience assisting Chicago residents and can answer your questions today.
Waiting Period for Home Loans After Bankruptcy
It’s not impossible to get a mortgage or to refinance your home after you’ve declared bankruptcy.  However, you’ll need to deal with a waiting period before applying for a home loan.  Depending on the type of loan you’re seeking out, you will need to wait somewhere between two and four years before applying for a new mortgage.  Generally speaking, conventional loans typically have the longest wait periods of all potential mortgage options, but you may be able to obtain FHA loans, VA loans, and USDA loans within a short number of years after your bankruptcy filing, according to a press release from the Federal Housing Administration (FHA).
Based on the type of loan and the type of bankruptcy, waiting periods differ.  Chapter 7 bankruptcy waiting periods are as follows:
·      FHA loan: you’ll need to wait 2 years from the date of discharge
·      VA loan: like an FHA loan, you’ll need to wait 2 years from the date of discharge
·      USDA loan: these loans have a slightly longer waiting period, requiring Chicago residents who have filed for Chapter 7 bankruptcy to wait for three years from the date of discharge
·      Conventional loans: these loans can require someone who has filed for bankruptcy to wait up to four years before seeking a new mortgage
Chapter 13 bankruptcy is different.  Since you’re not erasing all of your debts in a Chapter 13 bankruptcy, the rules for applying for a new mortgage are a bit more lenient:
·      FHA loan: if you’ve made 12 months of regular payments on your Chapter 13 bankruptcy payment schedule, you can apply for an FHA loan during the bankruptcy.
·      VA loan: like an FHA loan, if you’ve been making timely payments on your Chapter 13 bankruptcy, you can be considered for a VA loan during bankruptcy.
·      USDA loan: as with FHA loans and VA loan, if you make regular payments on your Chapter 13 schedule for at least one year, you can seek out a new mortgage or refinance.
·      Conventional loan: typically, a Chapter 13 bankruptcy will mean that you’ll need to wait 2 years after discharge before getting a mortgage.
While these are guidelines for obtaining a mortgage after you’ve filed for consumer bankruptcy, each type of loan has its own nuances and requirements.  Bankruptcy law can be complicated and frustrating to navigate on your own, but a Chicago bankruptcy lawyer at the Emerson Law Firm can help.  Contact us today to discuss getting a mortgage after bankruptcy.
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