Home ownership is often asserted to be the “American dream.” Many South Carolina residents look forward to purchasing their dream home; however, when financial struggles become reality, they worry that they will never be able to qualify for a mortgage. This simply is not true. In fact, many who file bankruptcy find that they are able to obtain a new mortgage within a few short years.
One benefit of bankruptcy is that it allows the individual to start over and rebuild his or her credit. Then, within just a couple of years, the individual will be eligible to apply for a mortgage. FHA and VA require a two year waiting period once the bankruptcy has been discharged; USDA requires three years. Additionally, conventional FNMA or FMAC loans typically require a four year waiting period.
During the waiting period, the individual has the opportunity to begin rebuilding his or her credit. In addition to adhering to the repayment plan, if one was generated as a part of the bankruptcy, he or she will want to be sure to make timely payments on all accounts. Additionally, through the use of a secured credit account, the individual can show that he or she does know how to manage debt. This will also add points to the individual’s credit score.
Bankruptcy will remain on the individual’s credit report for seven to 10 years, depending upon the type of bankruptcy. However, this does not mean that home ownership is unattainable. In many cases, bankruptcy offers the South Carolina resident the opportunity to start over financially and then attain his or her “American dream” of home ownership.