Buy a Home – Bankruptcy

Is it possible to buy a home with a bankruptcy? Are you considering filing?

If you are in a position where you are thinking of filing bankruptcy but want to eventually buy a house, it is possible! Although a bankruptcy will reduce your credit score by 200+ points, the damage is not ever lasting.

After your bankruptcy you’ll want to focus on achieving a perfect payment history with three or more credit references. Additionally, you will typically need to wait two years from the discharge or dismissal of the bankruptcy in order to be considered for a mortgage loan.

It always helps to get letters from anyone with whom you’ve been paying bills on time with (telephone, or other utilities and insurance providers, for example). You will never have too many good reports of your improved financial responsibility, especially after a bankruptcy.

It is a great idea to keep your current job, and ideally the same job from the time of your bankruptcy. Remember, you are trying to prove your consistency and reliability as much as possible.

As your credit lines start coming back, be careful not to use too much of what is available. Keeping the charges you make low will be a beneficial signal to lenders that you are serious.

One warning I always stress to people is to make sure whatever was causing the problems which led you to consider filing bankruptcy, in the first place, has been fully resolved.

Bankruptcy is a serious undertaking. You will be closing the doors on virtually any credit for a time, not to mention the mark it leaves will remain on your credit report for 10 years. Recurring financial problems become much more difficult to deal with once you’ve filed bankruptcy in the past.

Once you have made all the appropriate post-bankruptcy steps then you are ready to start your search, keep the following tips in mind.

Be very skeptical of sub-prime lenders that will charge insane amounts for processing fees, pre-payment and other fees. Most of the time I say, if it sounds excessive or unfair, it probably is.

Make sure you obtain 3 or more quotes from different lenders. This helps flush out the best deal.

Do not get frustrated, get creative! If you still need extra cash for a down payment, consider borrowing it form a friend or relative. After closing, you can often apply for a second or third mortgage up to the value of the house to repay. (Make sure to discuss any creative ideas with your lender)

First-time-buyers. Often there are sate-operated first-time buyers programs which can help you get started. A quick internet search can work wonders.

Make sure you have researched all other possibilities short of bankruptcy before you take this step. Having creditors bugging you every day can intensify problems that you might usually handle without considering a major bail-out.

In summary, review your credit report for mistakes and opportunities. Negotiating toward a clean financial history has helped many from filing for bankruptcy. Whatever your choice, make a move today ” you will be so happy you did!

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