Is It is Possible to Buy Home After Bankruptcy?

Bankruptcy can create a very trouble situation for anyone, especially when further money is needed in it. It is quite difficult, yet impossible to borrow a large amount of money after a bankruptcy filing. Though it is the toughest situation as well as awkward to think about buying home after bankruptcy, but still it is possible in a period of 18 months to 2 years. There are some steps you should follow if you really want to buy a new home in such drastic situation.

One thing is quite obvious, that if you are facing a bankruptcy proceeding than you must wait until a final decision is made. It is also obvious that nobody will be ready to lend you such a big amount after bankruptcy. So, it is better to wait for the right time to get financial status settled back in position.

  • Credit Ratings:

It’s for sure that your credit rating will be very less after a bankruptcy filing. In fact, your credit score was already going down before bankruptcy, so, post bankruptcy credit score situation may also get very critical. If we want to see a bankruptcy situation in a positive way, there are two points that are really important:

1. Awareness about your current financial position. You come to know about all details of your debts and money.

2. You get an experience by facing this situation and become more careful in future.

So the most important point you should focus on after facing bankruptcy is to rebuild your credit score and maintain your financial position. Now let us look at some points which will help you in rebuilding of your credit score after a bankruptcy filing. Buying home needs large investment, so you must satisfy your lender that you will make all possible efforts to pay money back.

  • Fair Credit Reporting Act:

This act provides you a gateway towards a clear process and a chance to correct all errors on your report. Actually this is the first step you should follow in order to gain the confidence of the lender. In addition,

you must prove that all obligations are vanished. To satisfy the credit reporting agencies it needs time and effort, you need to make sure that your credit report accurately reflects the outcome of your bankruptcy proceeding. Once you are sure that your credit report is clean of errors, it’s time to start rebuilding your credit score.

  • The Fastest Way to Start Rebuilding Your Credit Score:

You should try to gain the confidence of your lender in your abilities to repay if you want to rebuild your credit score in a short time period. You also have to adopt a responsible approach towards credit, like using only a small portion of your available credit and not applying for too much credit all at once. This can be led in two ways:

1. Installment Loans

An installment loan is simply the loan where you make “installment” payments each month, for example personal loans, mortgages or student loans. By paying these installments regularly, your problem will be sorted soon.

2. Secured Credit Cards

By using secured credit cards you can solve your problem. That’s limited to a certain amount you have in deposit with the issuing bank. It is seen that you may find it difficult to get an unsecured card after bankruptcy.

The Federal Housing Administration’s Policy:

Your dream of buying a new home can be fulfilled in a very short time if you are able to prove yourself a deserving candidate of the Federal Housing Administration’s policy. To qualify for a home loan, you need to adapt following points:

1. Bankruptcy has been discharged two years ago.

2. Payment of all judgments is regular.

3. A deed-in-lieu has been resolved three years ago.

4. The appropriate arrangements have been made via a repayment plan on file with the IRS.

Interest Rates after Bankruptcy:

It is mostly observed, that after a bankruptcy, your first home loan charges high interest rates. But don’t feel down, try to make large down payments to keep the loan small and make sure that loan does not impose a prepayment penalty.

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One Response to “Is It is Possible to Buy Home After Bankruptcy?”

  1. Andrew says:

    Of course you can buy home after bankruptcy, but you have to wait for at least six months before applying. :)
    Andrew recently posted..What is the Bad Credit Loan

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