How Soon Can I Qualify For A Mortgage After Bankruptcy

How Soon Can I Qualify For a Mortgage After Bankruptcy

Gustan Cho Associates are mortgage brokers licensed in 48 states

This guide covers how soon can I qualify for a mortgage after bankruptcy. If you follow Gustan Cho Associates regularly, you know we are experts in mortgage lending surrounding bankruptcies. Gustan Cho Associates offers all of our mortgage products without additional LENDER OVERLAYS. This allows us to finance mortgage loans in an active Chapter 13 Bankruptcy repayment plan or under two years discharged from a Chapter 13 Bankruptcy.

Over 80% of our borrowers at Gustan Cho Associates could not qualify at other lenders due to their lender overlays. This blog will detail how bankruptcy will affect your mortgage qualifications based on each agency.

This article will also cover how 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. This article 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?

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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 for bankruptcy this year alone.

The COVID-19 coronavirus outbreak may increase this number. While thousands of Americans cannot work, their bills keep piling up. This is a strange time in history.

Unfortunately, our elected officials have difficulty passing the next coronavirus economic stimulus package that the American people desperately need. We feel that this will cause more Americans to file bankruptcy soon. The good news is homebuyers can qualify for a mortgage after bankruptcy.

Types Of Consumer Bankruptcy

The two most popular types of consumer personal bankruptcies are Chapter 7, and Chapter 13 Bankruptcy. They each have their advantages depending on the individual situation.

We recommend you talk to your bankruptcy attorney to review your options. Chapter 7 will have more harsh consequences for mortgage qualifications compared to Chapter 13 bankruptcy.

In the following paragraphs, we will review each mortgage agency and how it will affect your 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. VA loans have the most lenient agency mortgage guidelines followed by HUD on FHA loans.

If you file a Chapter 13 Bankruptcy, you must be discharged for 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 discharge date. There is a four-year waiting period to qualify for a conventional loan after the 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 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 discharge 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 bankrupt 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 BankruptcyVA 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’s 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

No waiting period is required after the Chapter 13 Bankruptcy discharge 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 safeguard ensures 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

Suppose you are a veteran who has filed for Chapter 7 bankruptcy. In that case, 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. Including a home you are foreclosing on in a Chapter 7 bankruptcy can skew the waiting period slightly. In this scenario, a conventional mortgage is more forgiving than 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. 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.

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, and USDA will still go off the foreclosure recorded date to start your seasoning. There is a two-year waiting period from the 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.

Suppose you have a prior mortgage included in Chapter 7 Bankruptcy. In that case, 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 foreclosure date is when the name on the deed has been transferred out of your name and into the lender’s or the new owner’s name.  This is when the two-year waiting period starts on VA loans, and the three-year waiting period starts on FHA loans. Unlike FHA, USDA loans have a three-year waiting period after a housing event. The discharge date of bankruptcy 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 for bankruptcy every day. Bankruptcy affects all parts of the country; this problem is not specific to 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. Many Americans cannot afford large medical bills, even with deductibles and copays.

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 with 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.

Medical Reasons For Filing 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 soon. Unexpected job loss does not mean your bill stops. These bills pile up at an unmanageable rate. The longer you wait, the further you may end up in the hole. Filing for bankruptcy will help discharge debt 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

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

It is important to learn your lesson during bankruptcy to become financially responsible. Remember that it is not how much you make but how much you spend.

Most people who file bankruptcy normally become careful with their finances and do not over-leverage themselves in the future. If you find yourself in touch with your financial situation, we recommend contacting 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, contact us at 262-716-8151. Text us for a faster response (you may also email gcho@gustancho.com). You  will have a one-on-one mortgage consultation to discuss your qualifications. At this time, One of our experienced loan officers will go over bankruptcy requirements with you.

After your initial discussion, you will be prepared to upload income and asset documentation and then complete an online mortgage application.

A licensed loan officer in your state will send this application to you. 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 better understand 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 that 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 encourage you to research your best financial options if you are experiencing hardship. Buying a home may be in your best interest 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. Your file will need a manual underwrite when you are in an active Chapter 13 Bankruptcy repayment plan or less than two years discharged from your bankruptcy. While most banks and lenders have added additional qualifications during the COVID-19 coronavirus outbreak, the team at Gustan Cho Associates can still underwrite based on HUD Agency Guidelines manually. 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 or VA loans. Gustan Cho Associates has a national reputation of being a one-stop lending shop.

We are experts on government and conventional loans and 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 contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response.  Or send an email to gcho@gustancho.com.

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