Bankruptcy and Buying a Home
It’s Possible
Have you recently gotten out of bankruptcy and buying a home is one of your worries? Keep your fears at bay and do not lose hope. You can still get financing for a home even if you have filed bankruptcy, have had bad credit, or have gone through a foreclosure.
But of course, because you have had bad credit, you will need to spend more money than a borrower who has good credit. Buying a home does not only involve paying your mortgage regularly. You also have to allot a certain amount of your budget for insurance, taxes, and maintenance.
The Timing Is Important
If you are considering buying a home after bankruptcy, the first thing you have to know is when you can qualify to get a home mortgage loan. It is much easier to secure home financing if you wait for a few years before you buy a home. The majority of moneylenders advise people to wait for at least two years to secure a mortgage loan quickly. In this sense, patience is definitely a virtue.
One year after bankruptcy, you may apply for a mortgage loan if you can prove that you already have a positive credit history. So make sure that you have paid all the necessary payments for the last 12 months. If you have late installment payments, it will be hardly possible to have your mortgage loan application approved.
On the other hand, waiting for two years after the discharge of your bankruptcy is better because you have more time to build your credit anew and prove that you can now pay on time. You can even secure 100% financing if you can show good payment history and if the lender can validate your income.
Rebuilding Credit
After you have determined the right time for you to buy a home, the next step is to find out the ways you can rebuild your creditworthiness. Rebuilding your creditworthiness means making sure you have a clean slate after your bankruptcy. Clean up your credit report by repaying all your creditors and make sure obligations no longer exist. For instance, if your credit report still indicates an overdue payment when you have already paid it, then you have to ask the credit agency. Errors in your credit report should be reported to the credit agency to make the necessary corrections. Moreover, securing credit cards and installment loans can help you prove to creditors that you can pay your debts on time. Just make sure that you keep to your promise and be worthy of trust so that your credit history will not go bad again.
Aside from mortgage loans, there are other ways by which you can finance a home. For example, you may ask your relatives or friends to give you cash gifts to help you buy a home. You can also seek help from down payment assistance programs to lessen your home financing burdens.
As soon as you have gotten out of bankruptcy, you absolutely want to have a fresh start in your life. And what better way to change your life than getting a new home without any worries.