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Waiting Period After Chapter 13 Repayment
Am I potentially able to obtain a mortgage at this time while I am nearing the end of my Chapter 13 Bankruptcy repayment and will get discharged in six months? Or do I need to wait 2 years from the date of discharge of my Chapter 13?
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1 Reply
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So, you may have options in procuring a mortgage while you are close to completing a Chapter 13 Bankruptcy, but always bear in mind the following guidelines:
Timing and Eligibility
Chapter 13 Bankruptcy: During a Chapter 13 repayment plan, it is typical to acquire a mortgage. However, the lender will be required to determine how often you have missed making a payment and your ability to finish on time.
Discharge Timeline: Even though some people claim that you can already take a mortgage a little earlier than discharge, most lenders suggest waiting until after your full Chapter 13 Discharge so that your credit report is already updated.
FHA Loans
FHA Guidelines: The Federal Housing Administration (FHA) enables borrowers in a Chapter 13 bankruptcy to apply for a mortgage if they have made 12 on-time payments and seek a court’s permission.
Post-Discharge: If you are discharged after waiting, the FHA Guidelines state that the usual waiting period is one year after the discharge.
Conventional Loans
Conventional Financing: With a conventional option, some other repayments must be followed after bankruptcy. Therefore, if the application was made to any of the lenders, these lenders make the applicants wait two years post-discharge. However, in some scenarios, applicants can be preapproved early.
Lender Policies
Variability: If you have been borrowing after a Chapter 13 bankruptcy, you will notice that every lender uses different techniques. Therefore. Hence, it is ideal to contact multiple lenders and understand what criteria they use.
Credit Score and Financial Stability
Credit Health: The above characteristics will majorly impact the mortgage application process. Hence, stable monthly income and limited credit usage will greatly assist the process.
Consult a Mortgage Professional
Expert Guidance: Due to your circumstances, it’s best to speak to a mortgage broker or a lender who has experience dealing with such borrowers. They are experts in this field. They will give you effective strategies based on your conditions.
If you are near the end of your Chapter 13 bankruptcy, there’s a good chance you’ll qualify for a mortgage for a home loan even with FHA guidelines. However, it would be better to wait for discharge as it will make things a lot easier. Also, it may give you more options. You can talk to a mortgage professional to find the best way forward. We hope you enjoyed the vidéos, and if you have more doubts, feel free to ask us about anything else!