How to Buy a Home - Bankruptcy

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

If you’re in a position where you might file bankruptcy but want to eventually buy a house, don’t despair! Even though a bankruptcy will reduce your credit score by 200+ points, the damage is not permanent.

After filing bankruptcy you will want to be diligent on achieving a perfect payment history with three or more credit references. Most of the time you will need to wait two years from the dismissal of the bankruptcy to be reviewed for a mortgage loan.

It helps to get letters from people with whom you have been paying bills on time with (telephone, or other utilities, for example). You can never have too many good reports of your enhanced credit responsibility, especially after a bankruptcy.

Naturally, its a good idea to keep your job, and ideally the same job from the time of your bankruptcy. Remember, you’re trying to show case 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 issue to people is to make sure whatever was causing the problems which led you to consider the bankruptcy, in the first place, have been fully resolved.

Bankruptcy is a serious event. You will be closing the windows on almost any credit for a time, not to mentions the financial mark it leaves will remain on your credit report for 10 years. Recurring financial problems become harder to deal with once you have filed bankruptcy.

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 careful of sub-prime lenders that charge extremely high costs for closing costs, pre-payment and other fees. As I usually say, if it seems excessive or unfair, it usually 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)

If you are a first-time-buyer you could receive assistance. Often there are sate-operated first-time buyers programs which can help you get started. A fast internet search can work miracles.

Make sure you’ve exhausted all other options short of bankruptcy before you take this step. Having creditors harassing you can magnify problems that you might normally handle without considering a major bail-out.

In conclusion, examine your credit history and scores for errors and opportunities. Negotiating toward a clean credit report has prevented many from filing for bankruptcy. Whatever you decide, take action today ” you will be excited you did!