Can You Get a Mortgage After Filing Bankruptcy?
Dec. 27, 2021
It is important to plan for a bright financial future after filing bankruptcy. As St. Louis, MO, bankruptcy lawyers, AKS Law gets asked frequently about whether someone can get a mortgage after filing for bankruptcy. This is an excellent question. Before getting into specifics, something we tell clients all the time is that, after bankruptcy, just about anything you need will still be available to you…it will often just cost more as a result of higher interest rates.
If you are a first-time home buyer, mortgage companies generally extend easier terms to help you get started on your home-ownership journey. Generally, when buying a home, a buyer is asked to pay at least 10% down. The St. Louis Post-Dispatch reported in July of 2021 that the average home price in the area had shot up by over $50,000 to $324,000. That means the average St. Louis resident would need to have over $30,000 saved up to buy a house. Considering that the average American household, married or single, with or without children, has less than $5,000 in savings, this is clearly unrealistic.
With a first-time buyer program to help you out, you can often pay as little as $3,000-$5,000 down to buy your first house. Subsequent houses are then purchased by using the equity from the sale of the previous house as the down payment on the next house. We recommend that you speak to some mortgage lenders here in St. Louis before filing your bankruptcy for the most up-to-date information. Loan programs and standards change often.
Life After Filing Bankruptcy
After filing for Chapter 7 bankruptcy protection, the bankruptcy will appear on your credit report for 10 years. A Chapter 13 will stay on your credit report for 7 years. Bankruptcy is not a permanent feature on your credit history. Technically, mortgage companies can ask you if you have ever filed bankruptcy on your loan application, but they won't have any way to verify the information after these respective time periods.
Just like when you were younger, and you were told to get a credit card so you can establish good credit history, the same thing applies after bankruptcy. The sooner you can show you've bounced back from bankruptcy, the more ideal of a mortgage candidate you'll be.
Let Us Guide You Through Your Bankruptcy to Best Re-Establish your Credit for the Future
At AKS Law, we are passionate about strategizing with our clients to help them be prepared to achieve their future financial goals, like home ownership. Not only does AKS have years and years of experience, but we strive to provide top-notch customer service. For example, active bankruptcy clients will get access to their attorney’s personal cell phone number. This is why AKS gets testimonials like this all the time: “Andrew was great throughout my whole process. He kept me well informed of what was going on as well as what to expect. He was a great coach and lawyer” (from Irene). Let’s talk about how to best handle your bankruptcy for future home ownership. Call us at 314-740-2989.