Buying a home after a bankruptcy might seem like an impossible task, but it is definitely possible if you prepare well enough ahead of time. As long as you make your current payments in a timely manner and don’t overwhelm yourself, you can typically apply for a loan through a lender in as little as two years after filing.
Getting a Mortgage Following a Bankruptcy
Focus on your credit or what remains of it. Make a strict budget and stick to it. Add in all your expenses including food, utilities and other bill payments to give you a broader look at your financial stability. Then you need to check your credit report with all three credit bureaus to ensure that all the information is accurate, especially after filing a bankruptcy. File a dispute for any information that could harm your ability to get approved for a mortgage.
Build your credit up by using the resources you have available. Get a secured credit card or installment loan, such as a car loan or student loan that will help you re-establish your credit after bankruptcy. Avoid applying for basic credit cards, since it is likely that you will be denied and excessive credit inquiries lower your score.
Home Loan Approval Before Shopping
Realtors are more willing to work with people that have a letter stating that they have secured funding for a loan through a bank or other lender. Even if a specific realtor doesn’t offer the specific services that you need, you can usually get a list of others in the area that are available to assist you with the process from start to finish.
Scout out homes that are in your price range. You don’t want to try to take out a loan that has higher monthly payments than you will be able to afford on your budget. Your interest rate will likely be higher than average, but if you wait the minimum time period and keep your credit in good standing; you can secure an affordable interest rate on your mortgage. A larger down payment will also improve your chances of being approved for a loan, since you won’t need to borrow as much and you’ll also save thousands in interest throughout the term of the mortgage.
The process of getting a mortgage after a bankruptcy can be lengthy, but it is definitely possible with some careful preparation and planning.