Recovering after bankruptcy takes time. With dedication, however, you can begin to make great strides to improve your credit and financial health in just a few years. When it comes to buying a home after bankruptcy, there are a few options to consider. Certain loans have strict rules about how long after bankruptcy you can purchase a home. In this week’s blog from Nickel City Funding, we will discuss different mortgages that you may want to consider after bankruptcy and some tips to improve your odds of getting approved. If you live in North Tonawanda, Hamburg, Amherst, West Seneca, Lancaster, or nearby New York, we’re here to help. Contact Nickel City Funding to schedule a consultation today. North Tonawanda, Hamburg, Amherst, West Seneca, Lancaster
Obligatory Waiting Periods
The type of bankruptcy you filed will affect how long you must wait to purchase a home with conventional financing. After Chapter 7 bankruptcy, the clock starts after the bankruptcy is discharged, with a four-year wait until you can apply for a conventional loan and as few as two years for a nonconventional loan.
After a Chapter 13 bankruptcy, you may be able to get a conventional loan in two years or less and a nonconventional loan even sooner.
Conventional and Nonconventional Loans
Nonconventional loans, like FHA loans (backed by the Federal Housing Administration) and USDA loans (backed by the U.S. Department of Agriculture), were developed to help people who may not be in great financial standing find affordable financing. Rebuilding credit after home financing takes time, and these loans have lower credit requirements than conventional loans. USDA loans, for example, are available to qualified borrowers with credit scores as low as 500.
Conventional loans are fully funded and insured by private lenders, which means they have more stringent approval requirements when it comes to credit and financial health. Not only do some lenders set time requirements on how long you must wait until you’re eligible for conventional financing, but they also have higher credit requirements. You may find financing with a score in the 600 range, but you have a better chance of getting approved with a score of 700 or higher.
Improve Your Credit
While you’re waiting for the obligatory waiting periods to pass after bankruptcy, you can begin to work on improving your credit. There are some key steps you can take:
- First, you’ll need to ensure that you do not begin to accumulate debt again. You need to pay all your bills on time, each month.
- You can start to rebuild credit by asking a family member to cosign with you on any loan or by getting a secured credit card. Do not leave balances on any credit cards.
- Make a monthly budget and stick with it. There are several free financial counselors available if you search online who can assist you with this.
To learn more about different solutions for mortgage after bankruptcy, contact Nickel City Funding. The qualified mortgage agents at Nickel City Funding are here to help you find financing, no matter how you may have struggled financially in the past. We help clients in North Tonawanda, Hamburg, Amherst, West Seneca, and Lancaster, New York, so contact us to get started today.