Blog

Oct
23
Buying a Home after Bankruptcy: How Long Does It Take?

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Filing for bankruptcy does affect personal finances for quite a few years afterward, including inhibiting a person’s ability to buy a home. However, buying a home after bankruptcy is not entirely impossible if you are willing to wait. Over time, you can repair your credit sufficiently enough that mortgage lenders are prepared to help you purchase that home you have been dreaming of.

There is no hard and fast rule dictating how long you should wait after bankruptcy before applying for a mortgage. However, there are some broad guidelines that apply to most situations:

  • Bankruptcy Discharge – First and foremost, no mortgage lender will even entertain loaning you money until after your bankruptcy has been fully discharged. Discharge can take 3 to 5 months for a Chapter 7 filing, or 3 to 5 years following a Chapter 13 filing.
  • Two-Year Wait – As a general rule, real estate experts recommend consumers wait a full two years after discharge before applying for a mortgage. In the interim, individuals can go about rebuilding their credit with the goal of giving lenders something positive to look at when the time comes.
  • Rates and Terms – Anyone filing bankruptcy should understand that the best rates and terms for mortgages would not be available to them at the two-year mark. While they may get mortgage lenders to consider applications, interest rates will probably be higher and terms less desirable.
  • Mortgage Applications – It is important to get sound advice from a real estate professional before applying for a mortgage after bankruptcy. Every mortgage application will affect your credit rating; multiple applications and rejections will do further damage you cannot afford. Make sure you are ready to apply – in the eyes of lenders – before you do so.

What to Do in the Interim

Given that the consumer will be waiting at least two years after bankruptcy discharge to apply for a mortgage, there are things that can be done to improve one’s financial position. For example, a secured credit card is an excellent tool for rebuilding credit. A secured credit card is one that utilizes a cash deposit as collateral to ensure the consumer pays his/her bills on time.

Another good option is an installment loan. This kind of loan is any loan on which the borrower makes regular monthly payments. A car loan is a good example. If you cannot get a traditional car loan from a bank, there are dealers that offer special financing options for people with bad credit. As long as you pay each monthly installment on time, an installment loan is an excellent way to rebuild your credit.

With some patience and financial discipline, you can rebuild your credit and purchase a home after bankruptcy. We would urge you to be cautious along the way. Please undertake the steps necessary to ensure proper financial management so that you do not run into the same problems again in the future. This may include credit counseling, paid financial planning, and a commitment to avoid unsecured debt, such as credit cards and personal loans.

For more information about bankruptcy and home purchases, please feel free to contact us at your leisure. We would be happy to represent you to ensure the best possible outcome for your case.


Convenient Locations

In order to provide convenience for clients throughout Chicago and Northern Illinois, we have offices in the following locations: 

Chicago • Schaumburg  • Oakbrook • St. Charles • Naperville • And More

Locations

We have office locations throughout the Chicago Area:

Chicago (Downtown)

Schaumburg

Oak Brook

Naperville


All calls are routed through our Downtown office for your convenience.

Phone: 312-967-3159

Locations

We have office locations throughout the Chicago Area:

Chicago (Downtown)

Schaumburg

Oak Brook

Naperville


All calls are routed through our Downtown office for your convenience.

Phone: 312-967-3159

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