5 Things You CAN Do After Bankruptcy - #3

#3 CAN DO: Buy a House after Bankruptcy

Absolutely. In fact, there are many studies that show bankruptcy debtors can qualify for a home loan on the same terms as if they had not filed bankruptcy within 18 to 24 months after a bankruptcy discharge.

You see, what the creditors are concerned here is not your past financial troubles but your current financial status – e.g., your down payment, the stability of your income and the relationship between the loan payments and your monthly income.

That said, take note of the following things that you might want to do in preparation for your first house purchase post bankruptcy:

When purchasing a home after bankruptcy, the key is the discharge date, since there is usually a waiting period. If your loan was an FHA loan, you usually have a 2-year waiting period for that. For other conventional loans, the waiting period is four years.

Now, during the waiting period, you need to do two things: re-establish at least 4 lines of credit (auto loans or credit cards, for example) and maintain an excellent payment history.

Make sure that there aren’t any delinquencies on your credit report that should have been cleared off with the bankruptcy. If you find any, contact your creditors immediately. Include a copy of your “Schedule of Creditors” in your letter so that your creditors can indicate the debt was included in the bankruptcy and update your credit report.

The more money you have in your savings or checking account, the better and stronger your file is going to look to a lender when you apply for a home loan.

Remember that your ability to make a down payment bears great significance in your approval rating. If you have money in your savings account, your creditors will naturally conclude that you have the money to make a down payment.

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