Buying A Home After A Bankruptcy
Forest Gump may have inspired the t-shirt, but we all know that it sometimes happens. I’m talking about bankruptcy. Approximately 1.5 million people file for bankruptcy every year; for reasons such as job loss, medical emergencies, and divorce. Bankruptcy has an immediate and negative result on your credit, and it takes time to return to the credit tier you enjoyed prior to filing bankruptcy.
How will that affect your ability to buy a home?
The Fannie Mae Selling Guide is pretty specific. For a Chapter 7 or 11 bankruptcy, the minimum waiting period is four years after discharge or dismissal. This can be reduced to two years if documentation of extenuating circumstances is provided. (Here the guidelines are looking for a one-time occurrence, unlikely to be repeated, and evidence of credit worthiness since filing bankruptcy.)
In the case of Chapter 13 bankruptcy, there is a distinction made between discharge (four years) and dismissal (two years). Again, with extenuating circumstances, the waiting period after a discharge can be shortened to two years. If you have filed bankruptcy more than once in seven years, the waiting period is extended to five years. This can be shortened to three if the most recent bankruptcy is due to extenuating circumstances.
Now is a good time to look towards the future. Contact your Heritage Grove Credit Union Real Estate Lending Specialist to help you establish a plan to get you on the path to buy a home.
Contact Elena Christian at 503-485-4378 or Melody Lewis at 503-485-4366.