Our homes are some of the most important places in our lives; they’re our spaces to just be and create memories with our families. After filing for bankruptcy, you may feel at a loss and wonder if you’ll ever be able to purchase a home through a loan again.
Rest assured, there are ways to purchase a new home in the future. It takes time to get back on your feet, but you can certainly do it. Take heed of the following advice when planning to buy a home after bankruptcy.
Which Chapter of Bankruptcy Did You File?
The chapter of bankruptcy you file will have a great effect on when you can purchase a home. If you file a Chapter 7 bankruptcy, the countdown begins as the action is being discharged. This means you’ll need to wait around 2 – 4 years to start the process for traditional loans. If you’re looking for VA or FHA financings, you’ll likely need to wait around 2 years.
With a Chapter 13 bankruptcy, matters are a little more flexible. You may be able to apply for and receive a traditional loan to purchase a home around 2 years after your discharge. Again, FHA and VA loans typically require shorter waiting periods (sometimes as short as a year).
Regardless of the chapter of bankruptcy you file, be sure to keep up with payments, and ask the courts for permission to take a loan if that’s applicable to your case. Any steps you can take to rebuild your credit will be highly beneficial!
Was Your Home Foreclosed Upon?
Purchasing a new home after filing for bankruptcy and having an old home foreclosed upon makes things a bit more complicated. You may have gone through bankruptcy and then had to deal with foreclosure. Your first step is to determine if you’re still responsible for the old mortgage legally. If it was discharged during your bankruptcy, you won’t have to deal with 2 seasoning periods. (A seasoning period is the time between when the house was bought and when it can be sold to another buyer.)
Again, your credit scores will likely have been affected so do what you can to get them back up. No one likes to wait but you can use this time to build a better financial future for yourself. Sign up for regular credit reports, make payments on time, and have any inaccurate statements removed from your credit history.
While it takes a little more work when foreclosure enters the picture to buy a new home, it is possible, and you can do it with a little time and careful planning.
How to Get Started
First, have your bankruptcy discharged. Don’t waste your time trying to meet with mortgage lenders if this has been done. Wait it out and meet with a financial planner for the time being. If you’re in credit counseling, complete the program.
Next, be sure any debts you’ve paid back are off your credit report. Review your credit report thoroughly and have any inaccuracies rectified. This will go a long way for painting a more positive picture of your financial history for lenders.
Finally, be sure to consult with an experienced bankruptcy attorney. Tyler, Bartl & Ramsdell, P.L.C. has 20 years of experience helping individuals and businesses find a brighter financial future in the Northern Virginia region. To discuss your specific situation, contact us today!