If you’ve been weighing the pros and cons of hiring a bankruptcy attorney and beginning the filing process, there are many factors to keep in mind before moving forward. One of the most crucial is whether you plan to buy a house in the near feature. Here’s what you need to know about how bankruptcy influences your mortgage approval chances so you can plan accordingly.

How Bankruptcy Affects Mortgages

Filing for bankruptcy has a major impact on your ability to purchase a home in two ways: how long until you can file for a mortgage and how likely it is you’ll be approved. There is a mandatory waiting period before you’re allowed to apply for a loan. If you file for Chapter 7, this waiting period ranges from two to four years, depending on the type of loan you want. If you file for Chapter 13, the waiting period is one to two years from the discharge date. 

The likelihood of being approved for a loan depends on what your credit score was before filing. According to bankruptcy attorneys, most applicants should expect their score to drop at least 100 points after the proceedings are finalized. You’ll likely see this change on your credit history for up to 10 years.

How to Get the Best Mortgage Rate After Filing

If you want to improve both the chances of being approved and the quality of mortgage offerings provided, try to wait as long as possible before seeking a loan. Ideally, wait two to three years longer than the required waiting period for more time to work on your credit score and to lengthen the amount of time between when the bankruptcy went on your credit file and when lenders review your application.

Waiting also lets you save more money for a down payment, which will likely decrease your interest rates. Aim to save between 20–30% of the total value of the home.

If you’re looking for a bankruptcy attorney to help you devise a plan moving forward, turn to Greg Dunn, Bankruptcy and Debt Relief Attorney. Based in Honolulu, HI, this qualified lawyer has handled more than 12,000 bankruptcy cases and has almost 25 years of experience. Visit his website to learn more about his practice, and call (808) 524-4529 to schedule a consultation today.