Does the title of this post have you scratching your head? Well, it’s true! Working diligently to improve your financial picture can allow you to receive a mortgage in as little as one year after filing for bankruptcy. This is great news for people looking to start their life over and purchase the Birmingham new home of their dream.
Notice of a bankruptcy filing typically stays on a credit report for seven to 10 years, but mortgages guaranteed by the Federal Housing Administration are permitted one year after a consumer exits a Chapter 13 bankruptcy reorganization and two years after the more common Chapter 7 liquidation, which discharges most or all debts. Filing Chapter 13 bankruptcy makes it a little easier to receive a mortgage because of the partial repayment of debts. Mortgages from Fannie Mae and Freddie Mac call for a wait of two to four years.
There are a lot of things that go into getting approved for a mortgage after bankruptcy. Buyers must work hard to reestablish their credit. They can do so by managing their credit responsibly and pay rent and utility bills on time, or obtaining a secured credit card. Use the credit card consistently but if the payment is due on the first, then pay it on the 25th of the previous month.
Buyers can also find leniency if the bankruptcy filing was the result of a one-time occurrence such as death, divorce or illness. To receive a reduced waiting time, borrowers typically have to write a hardship letter explaining the situation and providing legal documents to support their claim. This process is tough though and shortened waiting periods are hard to get.
Just because you file for bankruptcy, does not mean it will be seven to 10 years before you can receive a mortgage. Before filing for bankruptcy check over the different kinds and choose the best one for you. After you have filed, make sure they you work diligently to reestablish your financial responsibility.
Harris Doyle Homes, a leading Birmingham home builder, offers beautiful new homes in six communities throughout the metro area. For more information on our luxurious new homes, visit the Harris Doyle website today!