Although bankruptcy in Florida can certainly help you ease up your financial obligations, the fact is that serious consequences also come with it. One of the most common issues people who file for bankruptcy will face is having a difficult time being approved for a mortgage.
Why is it so challenging to obtain a mortgage?
When you file for bankruptcy, you are likely to file for either Chapter 7 and Chapter 13. Chapter 7 involves what is called a liquidation of your debts. Chapter 13 allows you to structure a re-payment plan with your creditors. However, both types of bankruptcies will make it difficult to obtain a mortgage. This is because of three things that will affect you post-bankruptcy. The first one includes the length of your bankruptcy on your record, which is about 10 years; next is the visibility of the bankruptcy by lenders, and last is the time frame in which you are not allowed to even apply for a mortgage.
Types of mortgages you can obtain
Although the prospect of being approved for a mortgage is low, it does not mean you are out of options. One of the options people have include government-funded loans, which include FHA, VA or USDA. It should be noted that you will be asked to prove that you have waited the necessary time outline by your bankruptcy agreement and that you’ve taken steps to repair your credit score.
Applying for a mortgage
The very best thing you can do for yourself before applying for a mortgage is to not only request your credit reports from the three bureaus but find any errors that you can fix within them. You must also be mindful of how many applications you send out to lenders. This is especially important because your credit score may lower each time a lender requests it.
Going through bankruptcy is an emotional and complex matter. Unfortunately, the difficulties don’t end after an agreement has been made. It may be helpful to have an attorney by your side during and even after your bankruptcy.