Just because you have filed bankruptcy does not mean you can not get a home loan. You will however definitely pay a price for that but the bottom line is you can still qualify for a home loan. After bankruptcy your credit rating will be greatly affected and drop to a low point. The good thing is that you now know where you stand financially, that is in terms of how much you owe your creditors. The biggest step for you is to start building your credit score and in the process you can start your home loan application process.
Buying a house is a big investment in life and from the lender’s perspective it involves a big risk. That is why lenders try to be as strict as possible when they give home loans especially to people who have filed bankruptcy. For you to get a home loan after bankruptcy you have to prove to the lender that you can be trusted, you can only do this by repairing your negative credit rating. You need to know all your creditors and exactly how much you owe and then take steps to pay back the outstanding obligations.
Qualifying for a home loan
The bankruptcy will stay on your credit report for up to ten years. This does not mean that you have to wait for ten years before you can start applying for a home loan. You can qualify for a home loan within a period of two years after bankruptcy. The Federal Housing Administration (FHA) will allow you to start reestablishing your credit after 24months. You can only apply for FHA loans after you pay all your tax liens that are outstanding or when you submit your repayment plan to the Revenue Department. They also look at whether all your judgments have been paid.The costs of getting a loan after bankruptcy
Although you may qualify for a home loan you need to understand the fact that lenders will charge higher than normal interest rates for the loan. This can be discouraging at first but there are a few tips that you can do to reduce the interest rate charges. You can pay a large amount for your down payment and avoid the prepayment penalties that are usually charged by home loan lenders. Besides making a large down payment you also need to continue working on reducing your bad credit rating. You are likely going to get a better deal if you are able to show the lender that you are improving your credit score.
Tips and comments:Important tipsIn order to improve your qualification there are a few things that you may need to do. you can get a major credit card, it is easy and will help you in the following ways;
- The home loan lender will know that you do not have debt
- You will not be able to file for bankruptcy until after a period of seven years
- Filing for bankruptcy will give you a chance to make a fresh start.