Sunday, April 21, 2013

Getting a Mortgage While in a Chapter 13 Bankruptcy

Getting a Mortgage While in a Chapter 13 Bankruptcy






Considerations

You must obtain your case trustee’s consent to get any new credit, including a mortgage or a mortgage refinance, during your Chapter 13 plan. Also, because the fact that you filed Chapter 13 remains on your credit reports for seven years from the date you declared bankruptcy, you might have a hard time convincing a mortgage lender that you can truly handle additional debt. If a mortgage lender agrees to issue you a loan, you will likely need to pay much higher interest rates and also issue a down payment.

Expert Insight

You may be better off waiting to get a new mortgage until after you finished paying off your Chapter 13, according to MSN Money. After all, your recent bankruptcy status will dramatically impact your credit score; as the years following any bankruptcy filing pass, the damage to your credit rating lessens. Also, even if your Chapter 13 trustee allows you to seek a new mortgage or refinance an existing loan, you’re unlikely to qualify for the best rates due to your recent financial troubles.

Warning

Be careful when shopping for a subprime mortgage, whether you do so during or after Chapter 13, warns Bank Rate. Mortgages issued to borrowers with a history of significant financial troubles such as bankruptcy or home foreclosure often include potentially problematic provisions such as adjustable interest rates; while such practices reduce the risk to the lender, they markedly increase the risk of foreclosure if you once again run into unavoidable financial trouble.

About the Author


Stephanie Mojica has been a journalist since 1997 and currently works as a full-time reporter at the daily newspaper "The Advocate-Messenger" in Kentucky. Her articles have also appeared in newspapers such as "The Philadelphia Inquirer" and "The Virginian-Pilot," as well as several online publications. She holds a bachelor's degree from Athabasca University.


Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell
502-813-2795 fax
jlobb@keyfinllc.com

Key Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*

Louisville, KY 40222*



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