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What is a boomerang buyer?

You know you need to declare bankruptcy, but you don't want to let it wreck all of your financial plans for the future. You were hoping to buy a home and really settle in.

The good news is that you still can. Don't assume that bankruptcy means a home will always be impossible for you to get or that no one will give you a mortgage. You can get one, and then you'll be a "boomerang buyer."

Essentially, these are individuals who declare bankruptcy, discharge their debt, work hard to repair their credit, and buy homes just a short time later.

How short will that time be? It depends on a whole host of factors. For instance, if you decide to use Chapter 7 bankruptcy, you typically have to wait a few months for the debt to be discharged, and then you often have to wait about four years before you can be granted a conventional loan.

However, maybe you don't want a conventional loan. If you're looking for an FHA loan or investigating your VA financing options, you may only need to wait for two years.

Chapter 13 bankruptcy can also get you into some loans -- even a conventional one -- only two years after the discharge. The wait time may be shorter with VA options and FHA loans. With loans that are backed by the government, you may not even have to wait until you finish the repayment plan, but may be able to apply about a year after you file.

All situations are different, but you can see that understanding your real financial options shows that your dream of buying a home doesn't have to end. It's important to consider exactly what bankruptcy means for you and how your financial future will really look.

Source: Credit, "How Soon Can I Buy a House After Bankruptcy?," Chris Birk, accessed April 14, 2017

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