How long do I have to wait to buy a house after filing chapter 7 bankruptcy in Utah?

Because you’re asking this question, I have to start out with a warning: BE CAREFUL!

I get it; you are being smothered by debt, and you want to get your finances under control. You want a fresh start so that you can buy a house and build the life you’ve always dreamt of. You are not alone! And this is a goal that a chapter 7 bankruptcy attorney in Utah can help you accomplish by discharging your debts.

But it takes time.¬†You did not get yourself into this mess overnight, and you can’t get out of it overnight either.

The fact is that chapter 7 bankruptcy offers immediate relief by stopping debt collectors from harassing you, and pausing your monthly payments so that you can catch your breath. But you probably will not be able to get a mortgage right away.

FHA or Conventional Mortgage?

First of all, if you are planning on getting an FHA loan, you will have to wait at least 2 years from the date of discharge of your bankruptcy. That is the FHA’s lending policy, and there is not much you can do do about it. If you are considering a Conventional Mortgage (and you probably should be!) then the lender will determine how soon after filing you can get a mortgage. It’s possible you could find someone to give you a mortgage sooner, but more likely you will actually have to wait longer than 2 years after discharge to get a conventional mortgage. The standard time period is 4 years.

The decision of whether to get an FHA mortgage or a conventional mortgage is important, and how soon you can get one should not be your only concern. Out of haste, many people opt for an FHA mortgage because the qualify with a poor credit score, low down payment, and can apply sooner after filing bankruptcy. But this may not be a wise decision because it is going to cost you a fortune in interest rates and mortgage insurance.

A conventional mortgage does not require mortgage insurance if you have 20% down. You will need a better credit score, and you’ll have to wait longer, but you will save a ton in interest rates.

So, why not rent for a bit after filing Chapter 7 bankruptcy in Utah?

I know that you don’t want to wait any longer to buy a house. But if making rash financial decisions is what got you caught in this mess in the first place, then your best bet is to be careful with your financial future moving forward. Make sure you’re on solid ground before you try to leap to the next level.

High interest rates may be part of the reason you’re in this position. So be careful. Rent a house for a while. You don’t have to rent forever, just for a few years. Rebuild your credit by being responsible with car loans and credit cards. Save up a larger down payment. Then you can get the house of your dreams without digging yourself back into the same hole you’re in now!