Can You Buy a House After Bankruptcy, Foreclosure, or Short Sale?
As a Florida attorney who helps people in financial distress, I have the sometimes unpleasant task of discussing with clients their choice to walk away from a home that they have owned for years, whether it is during bankruptcy, through foreclosure, or a short sale.
The first question, naturally, is: Will I ever qualify to purchase a home again after I file for bankruptcy?
The answer is yes. Though, there are many factors that one must consider about yourself:
- Marital status
- Open trade lines on a credit report
- Type of bankruptcy (Chapter 7 vs Chapter 13)
These will all be taken into consideration when you apply for new credit.
The Biggest Factor in Getting a Mortgage After Bankruptcy
A person's down payment is the biggest factor to be considered. The more money that you can put down on a house, the less risk that the bank will be taking, and therefore, you should be able to negotiate a better interest rate on the money that you will be borrowing.
Can I Get a Mortgage in Florida 7 Years After Bankruptcy? Five? Two?
These are typically the minimum wait times you can expect to be approved. The time may be longer depending on the factors we have described above:
- Bankruptcy - Two years with certain government-backed loans, and four years with conventional loans.
- Foreclosure - Two years with government-backed loans, and three years with conventional loans.
- Short Sale - Two years with a 20% down payment.
Keep in mind that for some types of loans and circumstances, you could have to wait for as many as seven years in order to qualify.
Buying a House After Bankruptcy, Foreclosure, or Short Sale: Who Can Help
If you have questions about obtaining a mortgage after you filed for bankruptcy, I would suggest that you contact a mortgage broker who works with FHA loans, VA loans, USDA loans and understands each lender's requirements. Requirements often change so the answers to today's questions may change tomorrow. A good mortgage broker will be able to answer your questions efficiently.