Buying a Home after Bankruptcy

Buying a home after bankruptcy can be an immense challenge, but that doesn’t mean it’s not possible. You won’t be able to get a new home immediately following a bankruptcy, but after some time, if you know the processes behind home buying, you can secure funds for a house. Before you attempt buying a home after bankruptcy, make sure you have your finances in order and that you can reasonably afford another bill.

Step 1. Make Sure Your Credit Report Is Accurate

Ensure that your credit report contains an accurate reflection of the outcome of your bankruptcy hearing. Sometimes you must contact the reporting agencies in writing in order for them to remove information that is inaccurate.

Step 2. Rebuild Your Credit

Begin to rebuild your credit by utilizing options that are available to people with troubled credit histories. One of the best options is to obtain a secured credit card. With this type of card, you give the card company a deposit, and your credit limit reflects that amount. If you prove that you can handle this type of credit responsibly, you are well on your way to buying a home after bankruptcy.

Step 3. Wait at Least 24 Months before Buying a Home after Bankruptcy

You are eligible to regain credit for buying a home 24 months after discharging a bankruptcy as per Federal Housing Authority regulations. You must also meet other FHA regulations in order to be able to buy a home after bankruptcy.

Step 4. Pay Tax Liens or Make Arrangements with the IRS

In order to qualify to buy a home, you need to settle any tax liens owed to the government. At the very least, you should make payment arrangements with the IRS.

Step 5. Wait Three Years if You’ve Had a Foreclosure

If  the bank foreclosed on your home, you should wait at least three years before buying a home after bankruptcy.  This also holds true for any deeds-in-lieu which are on your record. Once these have been properly resolved, you can proceed with buying a home after bankruptcy.

Step 6. Pay Any Judgments against You

If you have judgments on your record, you must pay these off to qualify for lending according to FHA policies.

Step 7. Apply for a Mortgage

Once you have followed the steps above, you are ready to apply for a mortgage loan. Since you have bad credit, the interest rates won’t be stellar. Solve this problem by putting down a large sum, which will decrease the amount of the loan, and therefore, the interest you will accumulate.

Step 8. Learn from Your Mistakes

Don’t take your credit for granted once you finally re-qualify.  If you don’t want to go through the rigmarole once more, take care to pay your credit cards and mortgages on time.