Buying a House after Bankruptcy
Steps for Buying a House after Bankruptcy
It is not an easy task buying a house after bankruptcy. Once you have understood that this task won’t be easy, and still want to go ahead with your plans of buying a house, you must be aware of some essential steps that will help you during this process. The following are 5 steps that you need to take in order to make buying a house after bankruptcy a better experience for yourself.
1. Repair Your Credit Reports – When applying for a mortgage, lenders assess all three of your credit reports; therefore, you must make every effort to clean up your credit reports so that you will be eligible to take out a mortgage. Keep in mind, your credit is a critical factor when being approved for a loan, and will take some work on your part. Get as much help as you can, and take advantage of resources out there that will allow you to repair your credit. Once you take care of this, you’ll almost guaranteed to be approved for a loan.
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2. You Need a Realistic Budget – Purchase a house that is within your means. You may see and want the house of your dreams, but the reality is that at this point you cannot afford such a house. Do not get carried away by the idea that you can always finish paying for the house later, as this will only put your house at risked for being foreclosed or cause you to file for bankruptcy again. Buying a house after bankruptcy doesn’t mean that you have to live in a match box; however, purchasing a home that is within your budget allows you to be able to afford other things such as a car, cable or travel.
3. You first need to set aside at least a 10% down payment of the house you want to purchase – 10% might seem like a lot of money; however, due to the fact that you have already filed for bankruptcy, you most likely would have had to pay a down payment of 10% anyway. Furthermore, setting aside a 10% down payment prevents you from paying private mortgage insurance and it will teach you the monetary worth of your home and the value of your money. Figure out the cost of the home you want to purchase, calculate 10% of the cost, and then in a high interest rate savings account; save a certain amount of your salary each month.
4. Keep Your Present Job – When buying a house after bankruptcy, most mortgage lenders require that you have at least two years of employment. If you move from job to job, that means starting over and mortgage lenders will be reluctant to give you a mortgage at that time.
5. Work With a Mortgage Lender – Working with a mortgage lender will help you get your credit bank on track. Your mortgage lender will show you what homes you will be able to afford based on your present income, and work with you so that you can owe a home.
In buying a house after bankruptcy, you need to be patient, pay your bills on time, keep a steady job, avoid debt and save your money.
The Truth about Buying a House after Bankruptcy
As I mentioned earlier, your credit history will be a major factor with most lenders, and the overall approving process. Your number 1 priority at this point is to repair your credit, and prove to the loan companies that you deserve a mortgage after bankruptcy. Believe me, buying a house after bankruptcy is very possible for anyone willing to put in the work. There are many tools and resources out there that will allow you to clean up your credit history, and get you back towards financial stability. It’s definitely going to take a bit of commitment on your part, but getting the house of your dreams will be achievable.
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