If you plan to own a home in the future, the idea of going through a Chapter 7 bankruptcy now may seem absurd. Even though you’re in debt, you don’t want to totally ruin your credit score.
Don’t let the fear of being unable to get a mortgage get in the way of the possibility of getting out of debt, though. Chapter 7 bankruptcy can be helpful in eliminating your debt and getting you on track financially. While it can be challenging to get a mortgage after one, it’s not impossible.
How soon can you get a mortgage after bankruptcy?
With a Chapter 7 bankruptcy, you may be able to get a mortgage within two or three years. FHA and VA mortgages have a two-year waiting period following a Chapter 7 bankruptcy. Some other kinds of loans may have their own requirements.
There are sometimes programs that can help Chapter 7 debtors qualify for a mortgage sooner, so that’s something to consider as well.
How should you apply for a mortgage after your bankruptcy?
After bankruptcy, and when you’re ready to get a mortgage, look at your credit report. Resolve any kinds of errors that you see and check your score. If your score is very low, you can take some time to start building it back up. If it’s good or fair, then try not to take on any new debt before applying for your mortgage.
With all the bankruptcy documents, new pay stubs and other documents the loan officers ask for, you may be able to get into your new home sooner than you thought (and without debt hanging over your head).