If you have filed for bankruptcy, you may wonder when you will be eligible to apply for a home loan in Utah. The time period varies based on a number of factors. To find out whether — or when — you qualify for a home loan in Salt Lake City after filing for bankruptcy, talk to the mortgage lenders at Integrity First Lending.
How Bankruptcy Affects Your Credit
Filing for bankruptcy can be a difficult and painful choice. Consumers who file for bankruptcy often feel overwhelmed, afraid and sad.
While filing for bankruptcy can sometimes be a relief of sorts, it also carries with it a certain stigma. Many lenders and others who extend credit to consumers assume that someone who files for bankruptcy is a poor money manager who cannot be trusted to pay their bills.
The truth is, however, that the most common reason people file for bankruptcy is due to medical bills, which are no fault of their own. Other reasons include divorce, which many people also have no say in, and student loans.
Regardless of the reason, those who file for bankruptcy suffer by being unable to obtain credit for a period of time.
How Long Do You Have to Wait to Apply for a Home Loan in Utah?
If you filed for Chapter 7 bankruptcy, which discharges many of your debts (but not student loans or income tax debt), you have to wait at least four years to apply for a conventional home loan in Utah.
However, if you apply for a USDA loan, you only need to wait three years. For VA and FHA loans, it’s two years. You may or may not qualify for these programs, however; talk to the mortgage lenders at Integrity First Lending to see if you are eligible to apply.
With a Chapter 13 bankruptcy filing, you must wait at least two years after the court discharges your bankruptcy to apply for a conventional mortgage. You may be eligible to apply for government-backed mortgages sooner.
Why Your Credit Matters with Home Loans in Utah
These waiting periods are minimums. If you have made late payments or had other credit snafus during this time, it can affect your eligibility to apply for a mortgage.
Your credit score and your credit history are like records of your financial health and behavior. Lenders take a risk when they approve your mortgage, and some may opt not to take that risk Or, they may take the risk but charge higher interest rates because of your credit history.
The good news is that your financial mistakes will not follow you forever. They eventually disappear from your credit report, and hopefully are replaced with line items about on-time payments.
Home Loans from Integrity First Lending
If you filed for bankruptcy and wonder if you are eligible yet to apply for a home loan in Utah, come see the mortgage lenders at Integrity First Lending. We’ll run the numbers with you, and if you don’t qualify yet, we’ll tell you what you can do to improve your chances of qualifying next time. We’re your friendly, local Salt Lake City mortgage company.