Learn How to Buy a Home After Bankruptcy

Those who have been forced to file bankruptcy are sometimes discouraged when they go to finance a home. Although its true that a lot of lenders frown on those who have filed bankruptcy, there are lenders who are willing to finance your home – and give you a fresh start. These types of loans usually rely on income verification and a down payment as the most important factors that determine whether the loan is approved.

Your chances are greater for approval of a home loan after two years have passed since the discharge of your bankruptcy. You may be asked to pay a certain percentage of the purchase price down on the home before closing. However, if you have been working diligently on credit re-establishment during that time, you will have a great chance of not even needing a down payment – sometimes receiving 100{919468b76a1b111b1791bdf3e51426d8562c963af300c016649515c15309dd6c} financing.

Nothing Is Forever

Legally, a bankruptcy can only be noted on your credit file for up to ten years. That sounds like a long time, but a few short years may be all it takes to get you back on the road to financial recovery. By being proactive with your credit, you can start to lessen the effects of bankruptcy on your credit score the very day that the bankruptcy is discharged.

Pay On Time

Pay your bills on time, every time. Even if paying your bills by the due date makes you have less money for other things, it is extremely important to avoid late payments during the first years after bankruptcy. You need to show potential lenders that you have learned from your mistakes, and besides – you will save yourself some money on late fees!

Limit Your Credit

Do not apply for multiple lines of credit at once. Taper out the amount of credit that you apply for over a period of several months between loans or revolving credit lines. While it is advantageous to have open accounts, having too may credit lines open is like having a big red arrow hanging over your head that screams, I am desperate! This is a big no-no when loan officers look at your application for a home loan.

Avoid Splurges

Be a responsible steward of your available credit. Once you have a new credit line, do not go hog wild. Use no more than 30{919468b76a1b111b1791bdf3e51426d8562c963af300c016649515c15309dd6c} of the available line of credit, and pay the balance off in full each and every month. This is one of the fastest ways to raise your credit score.

Online Mortgages For Bad Credit

There are many online financial institutions that actually specialize in home financing for those who have filed bankruptcy. These lenders can not only get you the best rate, they are the most convenient source for applying. With informative websites that detail every aspect of the home-buying process, these lenders stand out as being helpful and sincere to borrowers that traditional banks turn away. Most of the paperwork for the home purchase can be filled out online using an easy application process. You may be required to fax or email a scan of signature documents during the closing.

There are also sites that feature home loan comparison shopping for those who are coming out of bankruptcy. Because of stiff competition in this area of financing, some banks will actually compete for your business – which will typically mean savings over the life of your new mortgage.

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