Home Mortgage After Bankruptcy

Find Out Why Getting A Home After You Have Filed Bankruptcy Might Be Harder Than you Think

Lender treatment of your Chapter 7 or Chapter 13 Bankruptcy

In general lenders treat either type of filing in the same manner. You may have filed a Chapter 7 bankruptcy, which allows you to erase the majority of statutorily erasable debt or a Chapter 13 bankruptcy, which will result in a payment plan with each of your creditors. No matter which type of bankruptcy you have filed, lenders will require both a lapse of time from the discharge and establishment of new credit before considering you for a home mortgage after bankruptcy.

Time must lapse before applying for a home equity loan

Lenders will require a lapse of time of two to four years from the discharge of the bankruptcy before even considering granting you a home mortgage. A lender wants to see that you have had sufficient time following the discharge of the bankruptcy to reestablish yourself and your financial affairs. Unfortunately for most lending institutions, this is a mandatory requirement that may prohibit you from obtaining a home mortgage within the first two to four years following your discharge from bankruptcy.

Establishing new credit

Even after the requisite two to four year waiting period, before a lender will consider you for a home mortgage, a lender will want to see your ability to establish new credit. New credit shows the lender that you have taken and can handle the responsibility of managing your credit accounts. Lenders will want to see at least two years of purchasing and paying the new credit on time. This means with the new credit that you establish, following the discharge from bankruptcy, you must make all payments on time and according to the payment contract. You must be establishing good credit for a lender to consider your application for a home mortgage after your bankruptcy.