Waiting For A Mortgage After Bankruptcy

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.

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L. Jed Berliner practices exclusively in consumer bankruptcy, foreclosure defense, and related consumer protection litigation such as credit card defenses and suing debt collectors. He established his Springfield, MA practice in 1988. Attorney Berliner is a regular and active contributor to the Bankruptcy Law Network, the Bankruptcy Roundtable, and the National Association of Consumer Bankruptcy Attorneys, three specialized consumer bankruptcy forums on the Internet, and is an informal mentor to regional practitioners. He is recognized by his peers as an expert in consumer bankruptcy issues. He thoroughly enjoys being rated "excellent" in his client surveys.

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