If you’ve filed for bankruptcy, applying for a mortgage or any type of loan may seem futile. Could it even be possible to secure such financial backing? With a bankruptcy attorney, it is. That’s not to say there are no challenges in getting approved for a mortgage. However, your chances are not completely eliminated. Here we’ll look at how mortgage attorneys can help and what options may be available.
A Mortgage Attorney Is Your Legal Advisor
Your bankruptcy lawyer can make sure your bankruptcy is filed correctly. Meanwhile, your mortgage legal counsel can determine how to proceed depending on the type of bankruptcy case. Chapter 7 bankruptcy liquidates your assets and remains on your credit report for 10 years. Chapter 13 adjusts your debts into a three- to five-year repayment plan and stays on your credit report for seven years after the court closes the case.
A bankruptcy on your credit report isn’t ideal for being approved for a mortgage. But if you can’t wait seven to 10 years, your attorney may advise waiting just 12 to 24 months to apply for a mortgage loan. The circumstances around your bankruptcy can affect your odds of approval. For example, you may not have to wait as long if extenuating circumstances such as divorce, loss of employment, a natural disaster, or the illness or death of a primary earner resulted in filing for bankruptcy.
Still, bankruptcy may mean higher down payment requirements and higher interest rates. You may save over the long run by waiting, but your overall financial situation and reasons for filing for bankruptcy may be considered by lenders and the courts.
How to Buy a House After Bankruptcy
You can buy a house and even refinance a mortgage after filing for bankruptcy. A consultation with your mortgage attorney can help determine how to proceed and address any potential issues. They can look at your credit report to identify any inaccuracies that need to be updated. Your attorney can also help with the mortgage loan application process and answer any questions that come up, as well as gather the information needed to submit your loan request.
Mortgage underwriters often deliver a set of conditions when a bankruptcy client applies. A skilled attorney can address any issues and provide clarification as needed. They can directly address complex income matters and other factors, such as liens on titles. You will also receive help during the closing process and with escrows and insurance.
Working with a mortgage attorney who specializes in mortgage loans after bankruptcy can significantly improve your odds of being approved.
What Kind of Mortgage Loan Can I Get After Bankruptcy?
You may have a few options to consider. Conventional mortgages can be the most difficult to be approved for. Credit score and down payment requirements are tighter than for government-backed loans. However, the Federal Housing Administration (FHA) can approve bankruptcy filers for a mortgage if they don’t miss payments during the waiting period, don’t incur additional debts after bankruptcy, and have a credit score of at least 580 (most conventional lenders require at least 620). Depending on your credit score, the FHA may require a down payment of 3.5% to 10%.
Veterans can apply for a mortgage with the VA, which doesn’t have a credit score requirement (depending on the lender). Best of all, the down payment is 0%. But if you don’t qualify for a VA loan and are purchasing a home in a rural area, the U.S. Department of Agriculture offers mortgages for applicants three years free of bankruptcies, foreclosures, and delinquencies. It offers only 30-year loans with income restrictions and credit score requirements, but some loans don’t require a down payment.
Speak with OakTree Law’s Los Angeles Mortgage Attorney
If you’ve filed for bankruptcy in the past and are considering applying for a mortgage, contact OakTree Law. Our team can help with the bankruptcy process and specializes in real estate mortgage litigation. Financial solutions have been found for many clients dealing with bankruptcy, foreclosure, and other issues. We can provide professional guidance and advice no matter what your situation is, even if you’re having trouble paying a mortgage (we also offer loan modification help). To request a free evaluation from our mortgage attorneys, reach out to us online or call 888-348-2609.