Many people fear that they will not be able to get a mortgage after bankruptcy. Considering the hit that most people take to their credit ratings when they declare bankruptcy, this is a legitimate fear. However, you are not necessarily unable to get a mortgage after bankruptcy, it will just be more difficult for you than it would be if you had good credit.
You might have to wait for a while after you file for bankruptcy before you can get a mortgage, however. This will give you more time to repair your credit rating and set up your finances so that you are better able to pay off the mortgage. However, if you lost your house during bankruptcy proceedings because you were unable to pay the mortgage, you are going to have a harder time getting a mortgage after bankruptcy.
Sometimes, depending on which type of bankruptcy you file, and whether or not you work things out with your creditors, you might be able to keep an existing mortgage after bankruptcy. Basically, in order to do this, you must file chapter 13 bankruptcy and show that you will be able to pay off that particular debt during the reorganization time that you are allowed due to your bankruptcy proceedings. Keep in mind, however, that if you are not able to pay off this debt then you’ll very likely lose the mortgage and may further damage your credit rating.
There are some companies that will offer mortgages after bankruptcy, however, this may not be the best decision for you if you can possibly avoid it. One reason for this is that these mortgage rates are very likely to be much higher than normal mortgage rates. The result is that you could end up spending far more in the long run on your housing costs and interest rates than you would otherwise.
If you do manage to get a mortgage after bankruptcy, and you do make your payments on time, however, you will find that your credit rating improves. Therefore, if you need to get a house right away, making regular mortgage payments might be the first step to get you out of the financial hole.