It all depends on what kind of mortgage you’re seeking
By: Darrell Castle
If you’re behind on your house payments and considering filing for bankruptcy, we’d love to talk to you. Call (901) 327-2100 to schedule a FREE consultation with one of our experienced attorneys. You can also find out more about 7 Steps to a 720 here.
How long after a bankruptcy do you have to wait before you can get a mortgage?
Hi, I’m Darrell Castle and I’m an attorney licensed to practice law in the state of Tennessee and the answer to that question is that it depends on which type of mortgage you’re seeking.
An FHA and VA loan, the two most common types of loans now, require you to wait two years after a Chapter 7 discharge before you can qualify for those mortgages.
But with a Chapter 13, which is a reorganization and a repayment of at least a portion of your debt, you can actually get an FHA loan while you’re in a Chapter 13. You have to make 12 successful and satisfactory payments in a row in order to qualify, and then you have to get court permission in order to do that. They’re going to ask you to explain the bankruptcy and so forth, but it should be doable for you.
Now, for conventional mortgages, it’s a little bit harder. For a Chapter 7, which is a total bankruptcy – or a liquidated bankruptcy – it requires four years wait after discharge. A Chapter 13, if you pay it all the way out to conclusion, only requires two years. But if you don’t, and your Chapter 13 is dismissed before discharge, then it requires a four year wait as well for a conventional mortgage.
Once you meet these waiting periods, you still have to qualify for the loan, so you still have to be credit worthy. That’s why it’s very important to get yourself into a credit rebuilding program, such as 7 Steps to a 720 – that’s very important. But, let’s say that you don’t want to qualify.
If you look in your Sunday paper every Sunday, you find many many non-qualifying assumable loans – loans you can buy from someone else who got a non-qualifying loan. All you need to do to get those loans is get a little bit of money for a down-payment, so it’s in your best interest to save that money, make a down-payment and save up for a qualifying loan. That is the best way to qualify for a non-qualifying assumable loan.