Filing for bankruptcy can be an effective way of getting a clean slate in terms of debt, escaping creditors’ calls, and being able to move forward with your life. Indeed, if you have exhausted your other options for repairing your finances, filing for bankruptcy may be your very best move, and provide you with the relief you need.
But filing for bankruptcy isn’t a perfect solution; when you file for bankruptcy, your credit is destroyed, and opening a credit card or getting a loan in the future can be very, very difficult to do. Which is why if you have filed for bankruptcy, and now have your financial affairs in order, you may be wondering whether the fact that you filed for bankruptcy will hurt your ability to purchase a home. Here’s what you need to know:
Buying a House Is Possible – Here’s How
Buying a house after filing for bankruptcy may be difficult, but it is possible. Here are some things that you should know about buying a home after you’ve filed for bankruptcy, and factors that a lender may consider:
- Waiting time. Don’t expect to be able to buy a home immediately after filing for bankruptcy; in most cases, you will need to wait at least two years’ time before a lender will consider your application if you filed for Chapter 13 bankruptcy, or filed for Chapter 7 bankruptcy and are seeking a non-conventional loan, such as a VA loan or FHA loan. If you filed for Chapter 7 bankruptcy and are seeking a conventional loan, you may need to wait up to four years. You should use the waiting period to rebuild your credit and save as much as you can for your down payment.
- Was your home foreclosed on? If your home was foreclosed on, the waiting time may be extended. An article published on Credit.com explains that when foreclosure is part of a potential buyer’s history, the wait period may be increased to seven years.
- Rebuilding credit. As you’re waiting out the time that is required before you can be considered for a loan, you should focus on rebuilding your credit. To get an approved for a loan, you will need to have mediocre credit at the very least, but the better your credit score, the more likely of being approved, and the better your chances of getting a lower-interest loan. Don’t go crazy in opening lines of credit, which may be more trouble than it ends up being worth. Instead, focus on opening just a couple lines of credit, using this credit, and making your payment on time and in full.
- Savings. To get approved for a loan, a lender will want to see how much you have in savings, and how much you can offer in a down payment on your new home. The more that you have, the better your chances of being offered a loan. Start saving for your new home right now. Even if you only put away $20 a week, this will be a couple thousand dollars after two years, and more than seven thousand after seven years. This can really help in the homebuying process.
If you filed for bankruptcy a few years ago and you’re ready to buy your home now, make sure to request copies of your credit report first so you know where you stand, and can check for any errors (and ensure they’re corrected) before you apply for your loan.
Learn More About Bankruptcy and Buying a Home Today
Filing for bankruptcy can be a scary thing to do, and there’s no doubt that filing for bankruptcy can have lasting consequences on your financial opportunities. However, filing for bankruptcy may be the only way of escaping debt and freeing yourself from economic worry.
At the law offices of Whibbs Stone Barnett Turner, PA, our experienced bankruptcy attorneys can help you to understand your options for filing for bankruptcy, as well as how bankruptcy may affect your future and ability to do things like buy a home. To learn more, please drop by our office today, send us a confidential message, or call us directly at 1-888-219-4561.