If you’re like many people, you’ve heard that it’s tough to buy a house, a farm or land after a bankruptcy. But is that really true? Can you buy a house after a bankruptcy, and if you can, how long should you wait?
Here’s what you need to know.
Can You Buy a House After Bankruptcy?
You can absolutely buy a house (or land) after a bankruptcy. Although bankruptcy gets a bad rap, it’s a lifeline to more than 800,000 Americans every year. There are two main types of bankruptcy that apply to everyday people: Chapter 7 and Chapter 13.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy releases people from debt obligations, but it requires people to liquidate their assets to pay creditors.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy requires people to repay their debts after working out a payment plan. It’s a type of debt reorganization.
How Does Bankruptcy Affect a Mortgage Application?
Generally speaking, you’ll have to wait two years after filing a bankruptcy before you can apply for a mortgage. That’s because most lenders won’t even consider your application until that period of time has elapsed. Some lenders require you to wait at least four years before you can apply. (There’s a notable exception, though: FHA loans only require one year.)
The more time you wait, though, the more favorably lenders are likely to see your application. That’s because you’ve had time to reestablish yourself and build up your credit score.
Before You Apply for Mortgage After Bankruptcy
Before you apply for a mortgage after a bankruptcy, you’ll want to check your credit score. Look closely at your credit reports from all three major reporting agencies, too – you need to ensure there aren’t any serious errors that can drag down your score. You’ll also want to save up as much money as you can for a down payment.
Your Lake City REALTOR® can help you find a lender that meets your needs, too – so don’t be afraid to ask your agent for a referral.
Are You Buying a Home or Land for Sale in Lake City?
If you’re moving to Lake City, we can help you find the perfect place to live. Call us at 386-243-0124 to tell us what you want from your home and we will begin searching right away.
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