28 Apr Waiting For A Mortgage After Bankruptcy
Okay. Two years have passed since you received your bankruptcy discharge – wait! You haven’t waited two years? Best to do so. You might, maybe, remotely possible, find a lender who will provide you with a mortgage earlier than two years, but the fees and interest rate will destroy you. Really. Best to continue until the two years is up.
A bankruptcy stays on your credit report for ten years, but after two years your credit score improves enough (without other non-bankruptcy factors) to allow reasonably affordable terms for a new mortgage.
The two year rule developed in 1998 when the federal Department of Urban Development, charged with encouraging home ownership throughout the country, noticed that the 1994 explosion of bankruptcy filings (which had followed a 1991 explosion of credit card debt offerings) wasrestricting federally guaranteed mortgages. So they changed the rules. That rule change swept across the credit industry, and now a two year wait after a bankruptcy discharge allows more reasonable terms for all types of credit.
Latest posts by L. Jed Berliner, Western & Central Massachusetts Consumer Lawyer (see all)
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