Once you’ve discharged your debts everything in your life gets disrupted. Many of your dreams and goals get put on hold or dropped out of site completely. One of the many questions that comes up is can you, and if so how, to buy a home after bankruptcy. Yes this can still happen for you, but not immediately and not without some serious financial work.
The main parts that make up your mortgage application are your credit history, your down payment, and your income. You’re going to need to do your best to build these areas up to the best they can be in the coming years.
You definitely cannot apply for a mortgage for at least two years. This may seem like a long time, but it will take at least this long to get your financial report to an acceptable level anyhow, so use this time to your advantage. Lenders expect that after discharging your debts you will hide away from making financial moves and take a long time to get back on your feet again, because this is what most people do. Instead, jump right into building up your credit history and improving your situation so you can buy a home after bankruptcy as soon as you can. Without some effort in this area it can take a lot longer than two years for this to happen.
For your down payment you want to just work on saving as much as you possible can, but keep in mind that ideally you want to have over twenty percent of the amount of your home for a down payment. This seems like a lot, certainly, but this will show a lender that you are serious, that you are capable of managing your finances, and it will help you avoid paying PMI (private mortgage insurance).
In terms of your credit you want to work on rebuilding your history right away. Build up a history of positive credit card and loan payments by using collateral to get both of these types of accounts. Make sure that all of your past debts are marked on your report as included in bankruptcy so you don’t have debts following you around. Above all else always, always, always make all of your payments on time and build a good budget so that you don’t get into any kind of financial troubles in your new life.
And, of course, try to keep a good, steady, well paying income. The longer you’ve been at your current job the better it will look to the lender in terms of stability.
With all of this in mind you’ll be ready with a strong application for buying a home after bankruptcy.
