ReeHart – Blogging from the Heart

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

If you are in a situation where you might file bankruptcy but still want to eventually buy a home, don’t worry! A bankruptcy will reduce your credit score by 200+ points, but this result 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 always helps to get letters from anyone with whom you’ve been paying bills on time with (telephone, or other utilities and insurance providers, for example). You will never have too many good reports of your improved financial 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.

When your credit lines begin to come back, do not use too much of what you have available. Keeping the charges you make to a minimum it will be a strong signal to lenders that you mean business.

One warning I always stress to people is to make sure whatever was causing the problems which led you to consider filing bankruptcy, in the first place, has been fully resolved.

Bankruptcy is a devastating event. You will close the doors on pretty much any credit for a period of time, not to mention the flags it leaves will remain on your credit history for 10 years. Recurring credit issues become much more difficult to deal with when you have filed bankruptcy in the past.

Assuming you have made all of the important post-bankruptcy steps and you are ready to begin 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 loan officers. This will help you find 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)

First-time-buyers. Often there are sate-operated first-time buyers programs which can help you get started. A quick internet search can work wonders.

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!

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