Rules vary among different lenders if you’re asking, How long after bankruptcy can you buy a house in Athens, GA? Government-backed loans, like VA loans, usually have shorter waiting periods. Generally, you must wait between two and four years after Chapter 7 Bankruptcy and one and four years after a Chapter 13 Bankruptcy. That’s an average of about two years. Typically, bankruptcy remains on your credit report for either ten years (Chapter 7) or seven years (Chapter 13).

The aforementioned two-year waiting period is a minimum period. At that point, a lender’s “no” turns into a “maybe.” Creditors still want to see that the debtor has made substantial rehabilitative steps since the discharge order came down. More on that below.

Our Athens bankruptcy lawyers do more than guide debtors through the filing process and stand up for them during court proceedings. We give debtors the tools they need to succeed after bankruptcy. That includes the ability to make a house or other large purchases sooner, rather than later.

Working With Lenders After Bankruptcy and Athens Bankruptcy Lawyers

As mentioned, bankruptcy remains on your credit report long after the house purchase waiting period expires. Although you are legally eligible for a home loan, obtaining one will not be easy. How long after bankruptcy can you buy a house depends on a variety of factors.

Being upfront with the lender is one way to make things go easier. When you first begin working with a mortgage broker or other lender, tell the person about your bankruptcy filing. Also, briefly explain the circumstances. There’s no need to go into detail. A statement like, “In 2020, I lost my job because of the quarantine and I had to file bankruptcy,” normally suffices.

That brief conversation means that the moneylender will not receive a very unpleasant surprise once your credit report comes back. Guarding against such surprises is an smart way to improve your chances of making the right impression on potential lenders.

On a related note, if the lender refuses to work with you because of the bankruptcy, do not take it personally. Some lenders have very strict rules in this area. And, there are plenty of other lenders who will at least give you a chance.

Speaking of other lenders, our Athens, GA bankruptcy attorneys often connect former debtors with lenders who work with bad credit buyers. There are a large number of such lenders. In fact, many creditors prefer working with bad credit borrowers. Banks charge higher interest rates for high-risk loans, which means they make more money.

Just like you had the power to take control over your finances with bankruptcy, you have the power to make yourself a more attractive potential buyer. More on that below.

At What Price Can I Afford a House?

This question is incredibly important and incredibly subjective. Even four or five years after discharge, the bankruptcy financial scars are still quite visible. And, with all the talk of debt-to-income ratios and purchase mortgage insurance, it’s easy to get confused.

No matter what you buy on credit, a sizeable down payment always reduces monthly payments. You have several years to put away a little money each month for a down payment. Take advantage of this time.

In terms of the monthly payment, a good rule of thumb is to match your PIE (principal, interest, and escrow) payment with your Chapter 13 debt consolidation payment amount. You made those payments once and you can do it again.

Bouncing Back from a Georgia Bankruptcy

Athens bankruptcy lawyers help debtors make some small steps toward financial security. If they do these things, after a few years go by, many people do not even remember that they filed.

Start by obtaining a credit card. That might seem like unusual advice, but it’s usually good advice. Charging something every month and making a payment every month is one of the best ways to raise your credit score. After all, your FICO score measures your ability to responsibly use credit, not your ability to pay cash for everything.

Normally, it’s best to find a credit card with a limit under $1,000. Sometimes, it’s best to pay the entire outstanding balance every month. Sometimes, it’s best to pay most of the balance and allow the bank to add interest charges. Monitor your credit report for a few months, try both approaches, and see what happens.

It’s also a good idea to make advance payments on your car, rent, and other secured debts. You will not miss an extra $100 or so per month. And, those small payments quickly add up. With a financial reserve, you’ll be better able to weather the next financial storm.

Include a “designated for principal” note on these cushion payments. Otherwise, the bank will probably apply them to interest, and there is no cushion.

Additional Steps to Improve Your Chances of Securing a Home Loan

Along with the recommendations mentioned above, other steps you can take to improve your chances of convincing a lender that you are prepared to buy a house include the following:
Undergoing Credit Counseling
You must participate in a credit counseling program and complete a debtor education course in order to qualify for bankruptcy in Georgia. However, it’s worth noting that the required courses and programs are the bare minimum. There are additional courses and programs you can enroll in after bankruptcy.

These programs will ideally help you develop better money management habits that can help you rebuild your credit. Additionally, they may help you convince a lender that you deserve a chance. If you can demonstrate to a lender that you are making a point of educating yourself on proper credit usage and personal finance, they may realize you have acknowledged the mistakes you might have made in the past, and are now committed to being responsible in the future.

It helps to think of applying for a home loan as being very similar to applying for a job or applying for admission to a college. Employers are more inclined to hire candidates who can show that they’ve taken various steps to boost their qualifications and skills. College admissions officers look for signs that applicants are academically inclined and generally willing to go the extra mile in pursuit of their goals. The mindset of a lender when you apply for a home loan isn’t very different.

Rebuilding Your Credit

Many people assume that the most important factor lenders consider when deciding whether to approve a home loan for an applicant who has filed for bankruptcy is whether the required waiting periods have passed. Usually, that’s not the case.

It is naturally important for the waiting periods to have elapsed when you apply for a home loan. That said, it’s generally agreed upon that most conventional lenders will focus primarily on your credit score when determining if you qualify for a loan.

Rebuilding your credit is one of the best ways you can make yourself a more attractive applicant to potential lenders. The ways in which you might go about doing so can be numerous and may depend on various circumstances.

For example, one of the most effective ways to rebuild your credit after bankruptcy is to take out a credit card or loan and use it strategically. Your goal is to only make purchases on credit when you are absolutely certain you will be able to pay off the balance.

You might assume that filing for bankruptcy will prevent you from qualifying for credit card or loan approvals. That’s not necessarily so. There are a number of lenders who are often willing to work with individuals and families in your financial situation. However, finding such lenders on your own can be difficult.

This is another reason to work with a bankruptcy lawyer. They can often connect people like yourself with lenders who are willing to approve credit cards and loans for those who have filed for bankruptcy and/or have poor credit.

A bankruptcy lawyer can also generally advise you on how you may rebuild your credit after filing for bankruptcy in other ways. They will assess your individual situation and help you develop an appropriate plan.

Keep in mind that guarding against any dips in your credit score is at least as important as rebuilding it in these circumstances. After filing for bankruptcy, you need to be very careful and disciplined to avoid making financial mistakes that can negatively impact your chances of buying a house any time in the near future. If you’re asking how long after bankruptcy can you buy a house, make sure that you will be able to fulfill your financial obligations.

Offer Various Ways for Lenders to Contact You

When considering whether to approve your application for a home loan, a lender will potentially reach out to you with questions. If you’re asking how long after bankruptcy can you buy a house, you’ll need be prepared to disclose everything. It’s important to be transparent and honest when discussing these matters with lenders.

You should also thoroughly provide a lender with information regarding how they can reach you when you first apply for a loan. This may seem like a minor step to take, but it’s actually an important one that can significantly influence whether a lender considers you to be a safe bet. Actively providing lenders with means of contacting you will demonstrate that you have every intention of honestly addressing their potentially understandable concerns.

Consider Working With a Co-Signer

This isn’t necessarily a strategy that’s ideal for everyone trying to buy a home after bankruptcy. When someone co-signs a home loan application, they are putting their own credit and finances at risk. If you fail to pay your mortgage, your co-signer will face consequences the same way you might. This could significantly jeopardize your relationship with them.

That said, there are instances when it’s appropriate to work with a co-signer when applying for a home loan. If you have genuine reason to be thoroughly confident in your ability to make mortgage payments, and your co-signer has the same degree of confidence for the same reasons as you, this could be an effective way to improve your chances of buying a home sooner rather than later after bankruptcy.

That doesn’t mean that working with a co-signer will guarantee a lender’s approval. When home loan applicants (particularly those who have filed for bankruptcy) work with co-signers, lenders nevertheless tend to place more weight on the credit and financial history of the applicant.

This isn’t meant to discourage you from enlisting the help of a co-signer. It’s instead meant to highlight the importance of taking various steps to improve your chances of being approved for a loan. Working with a co-signer is not a “magic bullet” that ensures success.

The Importance of the Pre-Approval Process

Many credit experts recommend beginning the pre-approval process for a mortgage once your finances are in order. Doing so will help you better understand how much you can afford to spend on a home.

This is beneficial for several reasons. Naturally, knowing how much you can afford to spend will prevent you from wasting time looking into homes that you may not be able to purchase in the foreseeable future. Additionally, when you do make an offer on a home, you can attach the pre-approval letter.

The Value of Waiting

Except in special circumstances, you can’t do much to give yourself a chance of buying a home before the required waiting periods expire after you file for bankruptcy. However, even after those periods do expire, you may not necessarily want to begin the process of attempting to buy a home right away.

It can be tempting to pursue home ownership as soon as you are eligible to do so. In some instances, this is also the proper financial decision.

Just keep in mind that exercising a degree of patience can often pay off in the long run when you’ve filed for bankruptcy and want to buy a home. If you’re asking how long after bankruptcy can you buy a house, stop to think if it is the best financial decision for you.

It’s no secret that a home is a major financial investment. After just recovering from a difficult financial situation, you may want to prioritize rebuilding your credit even further and saving even more before you proceed to seek home ownership. Remember, if you take the time to fully establish your financial security, your chances of being approved for a home loan will be much greater.
Alternative Home Loans to Consider After Bankruptcy
Conventional loans are not necessarily your only options when you’re trying to buy a home after bankruptcy. For example, you may qualify for an FHA loan, which could potentially help you buy a home much sooner than expected. An expert may be able to help you put together a thorough FHA loan application to help you get approved.

An FHA loan is government backed. That means that if you default on your loan, the government may pay the lender, not you. However, this does not mean your home won’t potentially be subject to foreclosure. The FHA’s goal is to minimize its losses. If it didn’t, the program wouldn’t function as intended. Thus, your house may be foreclosed on if you fail to pay your mortgage.

A VA loan is another option to consider. Of course, you will need to have either served in the military or be an active service member to qualify for a VA loan.

There are exceptions, though. Sometimes the spouse of someone who died in a manner related to their military service can qualify for a VA home loan.

USDA Home Loan Plan

If you’re asking how long after bankruptcy can you buy a house, another option is a USDA home loan. As with all the types of alternative home loans covered in this section, there’s no guarantee that you will qualify for USDA home loan, as you need to meet certain criteria and requirements to do so. For example, when you apply for a USDA home loan, the USDA will evaluate your household income to determine whether it meets certain guidelines. Additionally, USDA home loans are only granted to those who plan on living in areas that the USDA officially declares to be rural. If you’d prefer to live in the suburbs or a city, a USDA home loan probably isn’t an option you’ll consider. The section of the USDA’s website dedicated to home loans (linked to above) provides tools you can use to better determine your eligibility.

Still, these types of loans have helped many people buy homes more quickly and easily than they otherwise would after filing for bankruptcy. Once more, although buying a home via a conventional loan is very often still possible after bankruptcy, the process of being approved for a conventional loan will typically take much longer than the process of being approved for one of these alternatives (if you qualify for them, of course).

Reach Out to an Experienced Bankruptcy Lawyer in Athens, GA

Are you asking, How long after bankruptcy can you buy a house in Athens, GA? Most people can buy a house two years after they file bankruptcy. For a free consultation with an experienced Athens bankruptcy attorney, contact Morgan & Morgan, Attorneys at Law, P.C. Convenient payment plans are available.