Working with your bankruptcy and trying to secure an FHA loan after Chapter 13 bankruptcy can be a difficult process. In this post, we’ll be discussing how bankruptcy and FHA home loans can be approved, depending on the Chapter variation, in as little as one year. Read on to learn how Peoples Bank Mortgage can guide you through the overall process and have you well on your way towards seeing the light at the end of the tunnel for your FHA Home Loan.
Chapter 13 Bankruptcy and FHA Home Loans
The FHA allows a borrower to potentially be approved for a home loan during Chapter 13 bankruptcy provided the borrower has made timely, verified payments for at least one year although some financial institutions will require a total of two years after discharged before accepting a new home loan. One of the stipulations of FHA loans while in Chapter 13 is the borrower is not automatically able to apply for a new FHA loan. The court trustee’s written approval is the qualifying condition of the aforementioned policy. The borrower must provide an explanation of why they’re requesting a loan during their Chapter 13 Bankruptcy. At the same time the borrower must submit their FHA home loan application. To further qualify for the loan itself, the borrower must have satisfactory credit, employment, as well as other financial qualifications.
One of the biggest problems with getting an FHA home loan after Chapter 13 bankruptcy, is the lack of experience of the mortgage professionals involved in dealing with problems commonly arise during the loan process. The payments within the plan are often hard to verify, and many of the items that have been stripped in the plan aren’t clear to the FHA underwriters that must approve the loan. Other common problems are title inaccuracies and bankruptcy related credit issues that have arisen during or after the Chapter 13 plan. It is vital to find a bank that understands the common pitfalls and how to properly navigate them.
Chapter 7 Bankruptcy and FHA Home Loans
Chapter 7 Bankruptcy is slightly different from a Chapter 13 Bankruptcy due to the fact a Chapter 7 Bankruptcy requires the borrower to wait during the FHA’s “seasoning” period. This period of time is a minimum of two years, in addition to any extra time applied by the lender after evaluation. Some financial institutions will require a total of three years before applying for a new home loan. All in all, a Chapter 7 Bankruptcy requires a longer period of time than a Chapter 13 Bankruptcy timeline.
Are There Any Other Loans I Can Get During or After Bankruptcy?
There are always other loan vehicles which one may qualify for, the key is to analyze which options are available and compare. FHA, VA, USDA and some conventional refi options are often the best options with the lowest rates and most favorable terms. Yet, other “hard money” lenders are also available if no other options exist. . We at Peoples Bank Mortgage would suggest to thoroughly investigate any and all alternative loan options one may choose and use your best guidance if you do happen to choose another form of lending. Our staff here at Peoples Bank Mortgage will do our best to recommend the most proper loan for you with the most favorable terms possible.
Choose Peoples Bank Mortgage to help navigate the FHA loan process after Bankruptcy
When you choose Peoples Bank Mortgage to help you obtain an FHA loan after Chapter 13 Bankruptcy, you’ll find our expertise to be top-notch and focused on providing tangible results in the most expedited format. Feel free to contact us to learn more about our FHA mortgages and various other offerings and why you should choose us over other groups in our industry. We’ll be sure to reply to your inquiry as soon as possible. We look forward to hearing from you soon!