Many consumers struggling with excessive debt might feel a bit nervous about the thought of filing for bankruptcy. One of the reasons for this may well be the concerns they have about how a bankruptcy may impact them in the future. Bankruptcy offers people a way out of their current debt problems but need not be a barrier to future financial strength. In fact, bankruptcy may be the ideal conduit for achieving a healthy financial life, including qualifying for a mortgage.
As explained by Lending Tree, people who have filed for a bankruptcy can have the ability to buy a home again in the future. In most cases, a potential home buyer would wait a period of time between the conclusion of their bankruptcy and when they apply for a home loan. The length of time that they must wait will vary based on a variety of things, including the type of bankruptcy plan they filed, the type of loan program they will use, and whether or not their prior home was foreclosed on.
Most people end up waiting anywhere from one year to four years before seeking a new mortgage after bankruptcy. When looking for a new mortgage, the down payment requirement and interest rate will likely be higher if the wait time is shorter. By allowing the wait time to extend a bit, a consumer may benefit with a reduced down payment and lower interest rate on the loan.
SmartAsset notes that loan applicants should be prepared to provide a potential lender details of how they have corrected their financial standing so as to reassure the lender that approving the loan would be a wise move.