Buying Your New House After Bankruptcy

Are you thinking about buying a house after bankruptcy?  Perhaps you are wondering if it can even be done.  The good news is, it can. With some work, faith, and well-defined steps, you can be a homeowner even after declaring bankruptcy.

Can I Buy A House After Bankruptcy With Bad Credit?

Yes you can.  The same applies to buying a car after bankruptcy. Of course, you will not be able to do it right after your bankruptcy discharge.  It usually takes two years before lenders will want to work with you.  Be prepared, though, to meet some lenders who want three years or who are not willing to work with you at all.

Ideally, you have been cultivating a new mindset since your bankruptcy.  It is okay to live frugally.  In fact, it is preferable.  No more competing with the Jones’ or the cousin you grew up with.  Your financial journey is all your own, and it is entirely in your control.

As soon as your bankruptcy papers were filed, your credit score began to improve.  It’s true.  What have you been doing to help it improve even more?  There are some simple steps you can take to help your credit score recover.

Improve Your Credit Score After Bankruptcy

Try and get hold of a free credit report.  Most credit report companies offer a free trial.  Use it to your advantage and cancel before the money goes out to pay for it.  It is really ok to do this and very legal.  The credit report companies offer these free reports on the basis that some people will cancel and some will stay on with them.

Then open a savings account.  You might have sworn yourself to work with cash or money orders only, but that is not going to help your credit score.  Buying a home after bankruptcy requires that you have a bank account, so get going on that now.  Open an account and start saving.  Even if it is only $5 dollars a week at first, put it away.

Next, learn to love your current job.  While job-hopping is not always frowned upon when people have good credit, those who have poor credit because of a bankruptcy need to show a potential lender a steady and long-term employment record.  That means if you are dreaming of being a writer or affiliate marketer, do it on the side.  Keep your day job, and bring a smile to your future lender’s face.

Third, pay all your bills on time.  Believe it or not, people who have just declared bankruptcy sometimes forget how important this step really is.  Pay everything, from your rent to electric to library fees on time.  Get in the habit of paying on time, and it will be a habit that will serve you well for the rest of your life.

Buying A Home After Bankruptcy – Bigger Deposit

Buying a home after bankruptcy might feel like a far-flung dream, but it is not.  It is entirely possible to buy a home after a Chapter 7 or Chapter 13 personal bankruptcy.  So whatever you do, do not give up on your dreams.

Life after bankruptcy means having to do without some of the things that really don’t matter anyway.  Trim your budget every way you can, and put all your savings into the bank.  Shop when you’re not hungry, clip coupons, and make leftovers.  Stop going to the car wash, keep your old car, and learn how to change your own oil.  One by one and these expenses might be small.  But add them up and then eliminate them, and you have real savings.

People who have not declared bankruptcy are usually only required to put 3 to 5% percent down on a home purchase.  When buying a house after a bankruptcy you might be required to have a down payment of up to 20%.  That is why it is so important to save as much money as you can.  The more money you can put down on a house, the more likely you are to get a loan that has a respectable interest rate.

Home Loans After Bankruptcy

Be prepared to shop around for lenders when you are ready to try to get a mortgage loan.  Whatever you do, never lie about a bankruptcy, either in person or online.  It is easily discoverable, and a lender will almost immediately write you off as a poor credit risk because of the lie.

Have all your paperwork in order before you apply for a house loan.  That means at least six months of pay stubs and bank statements, and two to four years of income tax filings.  Bring copies of cancelled checks that document you paying your rent and utilities on time as well.  Also, be willing to show that you are up to date with any auto loans or credit card debts you have.

You can start shopping around at banks for a mortgage loan, but you might find better luck with credit unions or online.  Credit unions and especially online lenders might specialize in helping people who might have trouble buying a home after bankruptcy.  Many of them are willing to work with you so you can get the best interest rate on your loan.  It is entirely possibly that by following these steps you will find yourself buying a home after bankruptcy.

Buying a house after bankruptcy is achievable.  Make it your goal.  Just play by the rules and you will own your own dream home again.