Free Case Evaluation

 
 
X Close
Phone Call Us 414-326-9231
608-260-7133
Toll Free 866-678-9352
Text Us 414-277-7742
You can also feel free to text us at 414-277-7742 to set up your FREE appointment with our attorneys today

Life after bankruptcy: Qualifying for a home loan

On our blog this week we are discussing “life after bankruptcy.” On Monday, we highlighted rebuilding credit and establishing emergency savings after bankruptcy. Yesterday, we discussed qualifying for an auto loan after either filing for Chapter 7 or Chapter 13. Today, we outline qualifying for a home loan.

Like with auto loans, consumers who have gone through bankruptcy can expect to pay a slightly higher interest rate on their mortgage loans. The general opinion is that a consumer who has re-established good credit can qualify for a mortgage loan 18 to 24 months after a personal bankruptcy discharge. 

However, the Federal Housing Administration (FHA), which provides a majority of the mortgage loans to low-to-moderate income homebuyers in the U.S., has special rules when it comes to qualifying for a mortgage after a bankruptcy.

Following a Chapter 7 bankruptcy discharge, a consumer with a good payment history can qualify for an FHA-insured mortgage after two years. It is possible for the FHA to approve the mortgage after one year if: the bankruptcy was caused by something out of the homebuyer’s control (such as illness or job loss), the homebuyer has demonstrated financial responsibility and the circumstances that led to the bankruptcy are not likely to occur again.

Following a Chapter 13 bankruptcy, a consumer may be able to qualify for an FHA-insured mortgage if it has been more than a year since the bankruptcy payout period began, the payments have been made in a timely and consistent manner, and the bankruptcy court has granted permission.

Finally, it is usually not possible to qualify for an FHA-insured mortgage if the homebuyer has gone through foreclosure or has surrendered a home through a deed in lieu of foreclosure within the past three years. Although an exception may be possible if the foreclosure resulted from instances out of the homeowner’s control, such as illness, job loss or military deployment, and the homebuyer has re-established their credit.

Note: It’s very important to be wary of predatory lending tactics that prey on individuals with poor credit. According to the spokeswoman for the National Association of Realtors, it’s important to seek out information about the different mortgage programs available by speaking with a lender and checking with the Better Business Bureau.

Source: Bankrate.com, “Bankruptcy timeline: Rebuilding credit,” Brigitte Yuille, June 2, 2014

No Comments

Leave a comment
Comment Information

Contact Our Milwaukee Law Firm

Reach Miller & Miller Law, LLC, online or call us at 414-326-9231 to schedule a free initial consultation. Our law office also provides Spanish language services. Se habla español.

To schedule an initial consultation, call 414-326-9231 or contact Miller & Miller today.

Free Case Evaluation

* indicates required field

 
 

Milwaukee Office
735 West Wisconsin Avenue
Suite 600
Milwaukee, WI 53233

Phone: 414-326-9231
Fax: 414-277-1303
Milwaukee Law Office Map

Kenosha Office
6123 Green Bay Road
Suite 210
Kenosha, WI 53142

Phone: 262-326-1669
Kenosha Law Office Map

Brookfield Office
200 S. Executive Drive
Suite 101
Brookfield, WI 53005

Phone: 262-261-0665
Brookfield Law Office Map

Madison Office
2810 Crossroads Drive
Suite 4001
Madison, WI 53718

Phone: 608-260-7133
Madison Law Office Map