Many people in Michigan who may be considering bankruptcy as a solution to their financial challenges can at first resist this step in part based on things they have heard from others. Many rumors surrounding bankruptcy and its impact on consumers can prevent people from getting the help they need and deserve. Bankruptcy should not be viewed as a negative event but rather as a positive one that sets people on a better financial course, including providing them the ability to buy a home again.
As explained by Lending Tree, qualifying for a new mortgage after previously filing for bankruptcy is definitely possible, regardless of whether the bankruptcy involved a Chapter 7 or a Chapter 13 plan. Lenders assess a person’s debt-to-income ratio during the home loan application process. This ratio improves once a bankruptcy discharge has been received.
Consumers who take the time and effort to rebuild their credit wisely benefit from that work when they apply for a new mortgage as they can show a recent history of responsible use of credit to the bank. Every year that passes after the bankruptcy discharge, the impact of the bankruptcy on a person’s credit score lessens.
While obtaining a mortgage immediately after a bankruptcy may be possible in some cases, waiting a little bit longer may be in a consumer’s best interest, according to The Mortgage Reports. As a person’s credit score continues to go up and some time elapses after the bankruptcy, they may qualify for a loan with a lower interest rate or a lower down payment requirement.