How Soon Can I Qualify For A Mortgage After Bankruptcy

This Article Is About How Soon Can I Qualify For A Mortgage After Bankruptcy

If you follow Gustan Cho Associates on a regular basis, you know we are experts in mortgage lending surrounding bankruptcies. Gustan Cho Associates offer all of our mortgage products without additional LENDER OVERLAYS. This allows us to finance mortgage loans while in an active Chapter 13 Bankruptcy repayment plan or less than two years discharged from a Chapter 13 Bankruptcy.

Over 75% of our borrowers at Gustan Cho Associates are folks who could not qualify at other lenders due to their lender overlays. In this blog, we will detail how bankruptcy will affect your mortgage qualifications based on each agency. In this article, we will also discuss how we think the Coronavirus Outbreak will impact mortgage lending and bankruptcies. We will also discuss how to apply for a loan with Gustan Cho Associates.

Gustan Cho Associates is a national mortgage company with no lender overlays on government and conventional loans. In this article, we will discuss and cover How Soon Can I Qualify For A Mortgage After Bankruptcy.

How Soon Can I Qualify For A Mortgage After Bankruptcy: Can I Get A Mortgage With A Bankruptcy?

Bankruptcy does have a negative connotation and will be a derogatory remark on your credit profile. Bankruptcy was written into our laws to protect the American people in times of need.

It is estimated that over 750,000 Americans will file bankruptcy this year alone. The COVID-19 coronavirus outbreak may increase this number. While thousands of Americans are not able to work, their bills keep piling up. This is a strange time in history.

Unfortunately, our elected officials are having a hard time passing the next coronavirus economic stimulus package that the American people desperately need. We feel that this will cause more Americans to file bankruptcy in the near future. The good news is homebuyers can qualify for a mortgage after bankruptcy.

Types Of Consumer Bankruptcy

There are two main types of personal bankruptcies:

  1. Chapter 7 Bankruptcy
  2. Chapter 13 Bankruptcy

They each have their own advantages depending on the individual situation:

  • We recommend you talk to your bankruptcy attorney to go over your specific options
  • Chapter 7 will have more harsh consequences for mortgage qualifications compared to Chapter 13 bankruptcy

In the following paragraphs, we will go over each mortgage agency and how it will affect your mortgage qualifications. There is a waiting period after you file bankruptcy before you are eligible to enter into a mortgage loan.

How Soon Can I Qualify For A Mortgage After Bankruptcy: Conventional Loans

Conventional mortgages and waiting periods surrounding bankruptcies:

  • Conventional loans have some of the strictest guidelines when it comes to bankruptcies
  • If you file a Chapter 13 Bankruptcy, you must be discharged for a full two years before qualifying for a conventional mortgage
  • If you file for a Chapter 7 bankruptcy, that time is increased until four years after the discharged date
  • There is a four year waiting period to qualify for a conventional loan after Chapter 13 Bankruptcy dismissal date

Conventional loans have the longest waiting period after bankruptcy agency mortgage guidelines.

How Soon Can I Qualify For A Mortgage After Bankruptcy: FHA Loans

FHA mortgage and bankruptcy waiting periods. HUD guidelines overseen by The U.S. Department of Housing and Urban Development (HUD) are more forgiving surrounding bankruptcy waiting periods. There is only a two-year waiting period when you discharge a Chapter 7 bankruptcy.

If you file a Chapter 13 bankruptcy, you can actually obtain a mortgage loan while in your active Chapter 13 repayment plan. That’s right, during an active Chapter 13 bankruptcy, you can still qualify for an FHA mortgage. Many lenders will tell you there is a two-year waiting period after the Chapter 13 Bankruptcy discharged date, but that is a lender overlay, not a guideline. Bankruptcy Trustee Approval is required. Trustees will sign off on a new home purchase and mortgage.

The team at Gustan Cho Associates never had a case where the bankruptcy did not sign off on a new home purchase and mortgage for a borrower. Gustan Cho Associates are experts in helping home purchase and refinance borrowers in an active Chapter 13 Bankruptcy qualify for home loans during their repayment plan.

Please see this blog on how to obtain a MORTGAGE LOANS DURING AN ACTIVE CHAPTER 13 BANKRUPTCY

How Soon Can I Qualify For A Mortgage After Bankruptcy: VA Loans

How Soon Can I Qualify For A Mortgage After Bankruptcy

VA loans and bankruptcy waiting periods:

  • VA mortgage loans are very forgiving when it comes to bankruptcies
  • There is a two year waiting period after Chapter 7 Bankruptcy, foreclosure, deed in lieu of foreclosure, short sale
  • The brave Americans who served our country often run into financial hardships
  • It is a good thing that the guidelines are less restrictive for our nation veterans surrounding bankruptcies
  • The same is true for VA as it is for FHA, after one year of active Chapter 13 payments, you are eligible to enter into a mortgage loan
  • There is no waiting period requirement after the Chapter 13 Bankruptcy discharged date to qualify for VA Loans
  • This is a great advantage because there is no loan limit like an FHA loan
  • As of January 1st, 2020, there is no longer a maximum loan cap on VA loans
  • The veteran will need trustee approval to obtain a mortgage

This is a safeguard to make sure they do not put themselves in a worse financial situation.

Please see this blog on VA MORTGAGE LOANS DURING AN ACTIVE CHAPTER 13 BANKRUPTCY

VA Agency Guidelines On VA Loans After Chapter 7 Bankruptcy

If you are a veteran who has filed Chapter 7 bankruptcy, there is only a two-year waiting period after your discharge date before you are eligible for your next VA mortgage.

  • Foreclosing on a property within a Chapter 7 bankruptcy
  • If you include a home you are foreclosing on in a Chapter 7 bankruptcy, this can skew the waiting period slightly
  • In this scenario, a conventional mortgage is more forgiving compared to foreclosure guidelines
  • A typical foreclosure has a seven-year waiting period with conventional mortgages
  • However, if you include the property in your Chapter 7 Bankruptcy, the waiting period starts from the discharge date of the bankruptcy, not the recorded date of the foreclosure
  • This is important in some large counties such as Cook County in Illinois which could take quite some time to record your foreclosure

The foreclosure waiting period starts on the day the title is transferred out of your name. This is recorded with the individual County.

Mortgage Included In Bankruptcy Waiting Period Requirements

FHA, USDA, and VA requirements are slightly different:

  • Even if you include the foreclosing home in your active Chapter 7 bankruptcy, FHA, VA, USDA will still go off the foreclosure recorded date to start your seasoning
  • There is a two year waiting period from foreclosure date for VA loans and a three year waiting period for FHA
  • The fact that your home was included in your Chapter 7 bankruptcy is irrelevant when there is a foreclosure in the eyes of HUD guidelines
  • If you have a prior mortgage included in Chapter 7 Bankruptcy, the waiting period start date starts from the date the housing event (foreclosure, deed in lieu of foreclosure, short sale) has been finalized
  • The finalized date of the foreclosure is the date the name on the deed has been transferred out of your name and into the lender’s name and/or name of the new owner
  • This is the date the two year waiting period start on VA loans and the three year waiting period starts on FHA loans
  • USDA loans have a three year waiting period after a housing event like FHA does
  • The discharged date of bankruptcy does not matter

Conventional loans are the only loan program where if you had a prior mortgage included in a bankruptcy, the waiting period starts from the discharged date of bankruptcy and the recorded date of the housing event does not matter.

Resorting To Filing Bankruptcy Can Benefit Consumers In Getting A Fresh Financial Start

Filing bankruptcy and getting your debts discharged in bankruptcy is a lifesaver for consumers with substantial debt. Across the United States, thousands of people file bankruptcy every day. Bankruptcy affects all parts of the country; this problem is not specific to any large cities or rural areas. Americans file for bankruptcy for numerous different reasons. Some of the most common reasons for filing for bankruptcy are divorce, unexpected medical bills, an accident that leaves you medically injured, and unexpected job loss. Medical bills are a very common reason for filing for bankruptcy. Even with deductibles and copays, many Americans cannot afford large medical bills.

Most of the time, these bills are unexpected. You may receive news at a doctor’s office or be involved in a serious accident that leaves you in a pool of medical debt. Bankruptcy may be your only option to get out from under the large medical bills your insurance will not cover. Unexpected job loss is another reason Americans file for bankruptcy.

During the COVID-19 coronavirus outbreak, unemployment spikes hit an all-time high since the great depression. This is a scary time for America. We hope to see our workforce back in full swing as soon as possible. Unexpected job loss does not mean your bill stops. These bills pile up at an unmanageable rate. The longer you wait the further in the hole you may end up. Filing for bankruptcy will help discharged debt and/or get you a repayment plan where you do not have to stress about your debts.

Using Bankruptcy To Discharge Overwhelming Debt And Get A Fresh Financial Start In Life

How to use bankruptcy to pay off overwhelming debts and get a new financial start in life

Unfortunately, mismanagement of wealth is a common problem throughout America. Many Americans take on debt at an alarming rate. This seems to have a snowball effect and many Americans do not see a way out. Bankruptcy may be your only option. The United States Bankruptcy laws are put into effect to help Americans get back on their feet.

It is important to learn your lesson during his big bankruptcy and become better in the future. If you find yourself in touch with your financial situation, we recommend you reach out to a bankruptcy attorney as soon as possible. There may be other options for you. You will want to stress all options before filing for bankruptcy.

Contact Us To Prepare Game Plan In Qualifying For A Mortgage After Bankruptcy

To apply for a loan with Gustan Cho Associates, first, call Mike Gracz on 630-659-7644 (you may also email [email protected]). You and Mike will have a one on one mortgage consultation to discuss your specific qualifications. At this time, Mike will go over bankruptcy requirements with you. After your initial discussion, you will be prepared to upload income and asset documentation, then complete an online mortgage application. This application will be sent to you by a licensed loan officer in your state. The completed mortgage loan application will allow your loan officer to verify your credit report and start your mortgage pre-approval. Once the credit report is received, your loan officer will have a better idea of your next steps.

The COVID-19 Outbreak And How It Will Affect Americans Filing Bankruptcy

It will be interesting to see how the COVID-19 coronavirus outbreak affects bankruptcy numbers in the future. This unfortunate time in our history has caused financial hardship for many people worldwide. We have already seen over 7,000 corporate Chapter 11 bankruptcy filings this year.

These companies have laid off many employees, it is only a matter of time before we see an increase in Chapter 7 and Chapter 13 personal bankruptcies. As we all do our best to get back to work, it is impossible to ignore the fact of how many businesses have already gone under. It is sad to see, but numerous mom-and-pop shops are no longer around.

Many predict we will see a spike in the number of bankruptcies in the next few years. We can encourage you to research your best financial options if you are experiencing hardship. It may be in your best interest to buy a home before filing for bankruptcy.

Please speak with your bankruptcy attorney for specifics on your situation.

Qualifying For A Mortgage After Bankruptcy With A Lender With No Lender Overlays

As you can tell from this article and clicking around on our website, Gustan Cho Associates are experts in mortgage lending. When in an active Chapter 13 Bankruptcy repayment plan, or less than two years discharged from your bankruptcy, your file will need a manual underwrite. While most banks and lenders have added additional qualifications during the COVID-19 coronavirus outbreak, the team at Gustan Cho Associates is still able to manually underwrite based on HUD Agency Guidelines. Gustan Cho Associates has a national reputation of having no lender overlays on government and conventional loans.

The team at Gustan Cho Associates are experts in FHA and VA manual underwriting and helping borrowers in Chapter 13 repayment plans qualify for FHA and/or VA loans. Gustan Cho Associates has a national reputation of being a one-stop-lending shop. Not only are we experts on government and conventional loans, but we offer dozens of non-QM loan programs. Our Mortgage One Day Out Of Bankruptcy And Foreclosure is one of our most popular loan programs. There is no waiting period after bankruptcy and foreclosure with our Non-QM Mortgage One Day Out Of Foreclosure. The support and licensed staff at Gustan Cho Associates are here to help seven days a week. This includes late evenings, weekends, and holidays. We encourage you to call us directly with any questions. You can reach Mike Gracz on 630-659-7644 or send an email to [email protected]

Leave a comment