Buying A Home After Bankruptcy In Nevada

If you’re drowning in debt, buying a home may be the last thing on your mind. On the flip side, being able to purchase a home could be the driving motive behind dealing with your debt issues. Getting rid of debt can help a person improve their credit, which improves their chances of being approved for a home loan. It also leaves more income to save towards a down payment rather than paying back debts and interest. But the path to home ownership after bankruptcy discharge isn’t always straightforward. Rebuilding your credit is only the first step to becoming a homeowner after being a bankruptcy debtor. You must also satisfy the applicable waiting period, as well as meet requirements set by your lender. Read on for more information about buying a home after bankruptcy in Nevada. To speak with an experienced Las Vegas bankruptcy lawyer about your situation, call 702-370-0155. 

FHA Home Loans

FHA home loans are home mortgages offered by the Federal Housing Administration. They are geared towards first-time home buyers, offering affordable interest rates and low down payments. These loans can only be used on a primary residence, and the borrower must pay a Mortgage Insurance Premium, or MIP. A chapter 7 bankruptcy debtor must wait 2 years after their case has been discharged to qualify for an FHA home mortgage. Chapter 13 bankruptcy debtors are eligible for this type of loan upon discharge. 

VA Home Loans

VA home loans are home mortgages made especially for veterans of our armed forces. A veteran can purchase a home with a VA loan with 0% down without paying an MIP. They also have more flexible credit guidelines than most other types of home loans. VA home loans have the same waiting periods after bankruptcy as FHA home loans- that is, 2 years after a chapter 7 bankruptcy discharge and immediately upon a chapter 13 discharge. 

USDA Home Loans

USDA home loans are home mortgages meant for those buying home in rural areas. They come with favorable terms to incentivize people to move to areas that might not have as many employment opportunities as more urban areas. Like FHA and VA loans, chapter 13 debtors are eligible for discharge, or even during their payment plans- more on that below. However, chapter 7 debtors must wait 3 years after discharge to be eligible for a USDA home loan. 

Buying a Home During Chapter 13 Bankruptcy

Many bankruptcy debtors don’t realize when they first start their debt relief journey that they can still buy a home, buy a car, and engage in other financial endeavors while in an active chapter 13 bankruptcy case. Typically, a debtor’s finances are frozen by the automatic stay, putting these types of matters on hold until the case has been discharged and any waiting periods have been satisfied. This is an inconvenience, but a more temporary one for debtors who file for chapter 7 bankruptcy. These cases generally take about 4 to 6 months to complete. But a chapter 13 bankruptcy case will always last for a set 3 or 5 years. This is a long time for someone’s life to be interrupted by limitations brought about by the automatic stay. But the good news is that many debtors are able to undertake things like buying a home before their chapter 13 bankruptcy case is discharged. 

It should go without saying that for a chapter 13 bankruptcy payment plan to stay in good standing, the debtor needs to stay current on their monthly payments. Any changes of income should be brought to the debtor’s attorney immediately to see if the plan can be modified to reflect their new budget. But staying current on payments can also open new doors for chapter 13 bankruptcy debtors in active cases. A chapter 13 debtor can qualify for a VA, FHA, or USDA home mortgage 12 months into their payment plan with court approval. Obviously, the court will only approve if the debtor is up-to-date on plan payments. This option is not available for debtors who plan to purchase a home with a conventional mortgage loan. 

Conventional Home Loans

Some homebuyers aren’t eligible for any of the specialty types of home mortgages described above. If so, that leaves conventional home loans as a means to finance a home purchase. Because there are no government regulations supporting these types of loans, they have the longest post-bankruptcy waiting periods. Chapter 7 bankruptcy debtors must wait 4 years after their discharge date to qualify for a conventional home loan. The waiting period after chapter 13 bankruptcy depends on how the case is resolved. If a chapter 13 bankruptcy case is discharged, the waiting period for a conventional home mortgage is 2 years from the discharge date. But if the case is dismissed for any reason, the waiting period is 4 years from the dismissal date. If you are planning on buying a home with a conventional home, you should consider bankruptcy very carefully and explore other options of debt relief that may be available to you. 

Other Considerations for Buying a Home After Bankruptcy in Las Vegas

It’s never too early to start learning about the steps you can take to improve your credit after bankruptcy discharge, especially if you anticipate buying a home afterwards. Opening new lines of credit with reasonable interest rates, and staying current on payments for them, will help re-establish the debtor’s credit history. Paying credit cards in full each month also keeps revolving credit high, which helps boost a post-bankruptcy debtor’s credit score. They can also use a secured credit card, or a pre-paid credit card through their bank, to slowly and securely rebuild after bankruptcy discharge. You may have a loved one who is willing to add you as an authorized user on one of their accounts. Your bankruptcy attorney can provide more guidance on how to raise your credit score after clearing your debts. 

Another issue to keep in mind is that post-bankruptcy waiting requirements can vary by lender. A common example is a minimum credit score requirement, such as 620+, before that person can qualify for a home loan. It also isn’t uncommon for financial institutions to require several months, such as 12-24 months, of clean credit. While this should already a bankruptcy debtor’s goal, it is even more crucial if that debtor has goals of purchasing a home. You may already want to start looking into which type of loan you want and from which financial institution so you can be aware of their specific requirements. 

Prepare for Life Before, During, and After Bankruptcy with Our Las Vegas Debt Relief Lawyers

An improperly filed bankruptcy case could delay homeownership plans by years. With your future on the line, one of the best investments you can make is in skilled legal counsel. If you don’t think you can afford the costs of high-quality bankruptcy representation, think again. Our firm offers payment options that start after your case has been filed and the automatic stay protects your resources from creditors. File for bankruptcy with security and confidence, knowing you have an experienced Las Vegas attorney to complete the necessary steps for your case. There is no risk to get started with your free consultation by phone. Ready to get started? Call 702-370-0155 today.

Las Vegas Bankruptcy Lawyers

LAS VEGAS
7251 W Lake Mead BLVD #300
Las Vegas, NV89128
Office: 702-879-2499
Email: [email protected]

HENDERSON
1489 W Warm Springs Rd. Ste 110
Henderson, NV 89014
Email: [email protected]

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