Getting A Home Loan After Bankruptcy
Getting a home loan after bankruptcy may be a little more difficult, but with this guide, you'll be able to make the smartest choice for your situation.
Rebuilding Your CreditBankruptcies can stay on your credit report for up to ten years. Even so, you don't have to wait ten years to buy a new home. In fact, filing for bankruptcy helps you start rebuilding your credit immediately. Research shows that debtors can qualify for a home loan on the same terms as non-filers in as little as 18 to 24 months.
You Can Re-establish Your Credit With FHAThe Federal Housing Administration's requirements for home loan qualification are more flexible than other lenders. You can begin re-building your credit as long as you meet the following requirements:
(1) 24 months have passed since your bankruptcy discharge;
(2) You have paid or made arrangements to pay any outstanding tax liens;
(3) Three years have gone by since any foreclosures or deeds-in-lieu of foreclosure; and
(4) You have paid all judgments.
Filing for a Home LoanUnfortunately, when you apply for a home loan after bankruptcy, any home loan you get will no doubt be at a higher interest rate than for a person who has not gone through a bankruptcy. Even so, don't let that change your mind. You can do two things: First, make your down payment as large as possible. This will keep your loan small. And second, make sure that your loan does not have a prepayment penalty. In this way, as your credit score improves, you can refinance your home at a lower interest rate.