When you complete the bankruptcy process, you may feel as though a significant weight has been lifted from your shoulders. If this is the case, you may be excited to move on with your life, including hitting milestones like buying a home. However, you may soon be disappointed to learn that obtaining a mortgage after you’ve filed for bankruptcy is an incredibly difficult process. As such, the following blog explores what you should know about these matters, including how long the waiting period is and the importance of discussing your legal options with Franklin County bankruptcy attorneys to help you during these difficult times.
Is There a Waiting Period to Obtain a Mortgage After Bankruptcy?
In the event you wish to obtain a mortgage after filing for bankruptcy, it’s important to understand that you may be subject to waiting periods based on the type of loan you are applying for.
Generally, if you are applying for a conventional loan, you should note that these are the most difficult to obtain following bankruptcy, because they are not backed by the government, but rather by private lenders. As such, you are subject to a four-year waiting period following your Chapter 7 discharge and a two-year wait after your Chapter 13 discharge. You should note that this could vary based on the individual lender, however.
Government-backed loans, on the other hand, often have shorter waiting periods after bankruptcy. For example, FHA loans cut the waiting time of conventional loans in half to two years for Chapter 7 and one year for Chapter 13 following their discharge. Loans backed by the Veterans’ Association are available for those who have served at least 181 days during peacetime, 90 days during wartime, or six years in the National Guard. This waiting period is two years after Chapter 7 and immediately following a Chapter 13 discharge.
What Other Factors Can Influence This Process?
It’s important to understand that waiting periods aren’t the only factor that can influence your ability to secure a mortgage following bankruptcy in Ohio. It’s also important to begin rebuilding your credit once you’ve filed, as this can not only increase your chances of approval when you are eligible to apply, but it can help you obtain better loan terms.
One of the most beneficial ways to rebuild your credit after a bankruptcy filing is to minimize how much debt you have. Unfortunately, many people obtain a sense of financial freedom once their eligible debts are discharged, which can lead to poor financial decisions and ending up with accumulating debt. As such, it’s imperative to ensure you minimize how much debt you are in and live within your means as you rebuild your credit.
You may also want to consider applying for rebuilder loans, which are intended to help those who have recently completed the bankruptcy process rebuild their credit scores. Typically, this entails low amounts, high-interest loans that you can make payments on solely for the purpose of building your credit and showing lenders that you are able to make on-time payments.
Bankruptcy is a difficult and incredibly nuanced process to navigate. As such, it is generally in your best interest to connect with an experienced attorney to help you through this process. At Cousino & Weinzimmer LLC, we understand that making the decision to declare bankruptcy can be overwhelming. That is why we are committed to helping you fight for the best possible outcome for your circumstances. When you need help, don’t hesitate to contact our firm today.
