It is possible for people who have filed a Chapter 7, 11 or 13 bankruptcy to purchase a home at a future date. However, you do have to be able to demonstrate that you are worthy of credit again. As any bankruptcy attorney would tell you, a bankruptcy is not the same as a clean slate, a financial do-over if you like. However, it also doesn’t mean that you will no longer ever be able to get any type of credit.
The majority of people dream of being able to own a home at some point in their life. A past bankruptcy does not necessarily have to stand in the way of realizing that dream. Since your past creditors can no longer claim any money from you, you can in effect start again. There are very few people who would be able to purchase a home without a mortgage. People who have gone through bankruptcy are even less likely to purchase a home without a mortgage. However, if you can prove you have rehabilitated after your bankruptcy filing and now have your credit in order, lenders should be willing to give out a mortgage. The Fair Isaacs scoring system is most commonly used for this. The determination of interest rates is based on risk, just as with those who have not been bankrupt. As a rule of thumb, a low FAIR Isaacs score means a high interest rate. However, those who can make a good down payment will find that their interest rate drops again as well. If you can get someone to cosign your mortgage, the interest rate will drop down further. Naturally, the longer you wait and deal with credit appropriately, the better your FAIR Isaacs score will be.
Your bankruptcy will have a negative effect on your credit score for two years. Once these two years are up, you should be able to start looking for a mortgage again. The mortgage market is becoming increasingly competitive again, which means there are even a number of products designed specifically for those who have filed for bankruptcy in the past. You do, however, have to be certain that you are no longer facing the same problems that made you go bankrupt in the first place. You have to work on your credit and plan ahead, including for the costs of applying for a mortgage and buying a house. Do also make sure you have a pre-approval letter from your lender before you put an offer in on a house. In doing so, you won’t have to face disappointment if you can’t get a mortgage after all.