There are many myths and misconceptions about bankruptcy. Indeed, there are far too many to clear up in just one blog post.
But let’s take one such misconception: that by filing bankruptcy, you are compromising your ability to get a mortgage to buy a house in the future. In practice, this is simply not always true. Rebuilding credit after bankruptcy is entirely possible for many people, and this includes the ability to eventually qualify for a mortgage.
Let’s say you live in the San Antonio and area, have filed Chapter 7 bankruptcy and have discharged your debt. In two years, you could be eligible to apply for an FHA or VA loan in order to buy a house. If you are seeking a conventional mortgage, it could take somewhat longer – perhaps four years.
The process could go even more quickly if you filed for Chapter 13 bankruptcy. In that case, you could be eligible to apply for an FHA or VA loan in only a year, or for a conventional loan in two years.
In certain cases, a lender may even depart from industry standards and approve a loan earlier than the guidelines call for.
Of course, this all assumes that you’ve got the income to qualify under current underwriting standards to actually buy the house. If you do, however, don’t think that a past bankruptcy will hold you back indefinitely.
To be sure, when rebuilding credit, you do need to be careful to pay all of your bills on time. Don’t let anything go past due, because you want to reestablish a strong credit rating. Failing to keep current on your obligations will hinder you in accomplishing that goal.
Source: “Even After Bankruptcy You are Still Eligible For A Mortgage,” Business Insider, Michele Lerner, 10-10-12