How to Purchase a Home After Filing Bankruptcy

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If you just filed for bankruptcy, you are pretty much persona non grata to most lenders. While bankruptcy wiped the slate clean for the most part, now lenders will be a lot more hesitant to approve you for a loan – and it doesn’t stop when you are trying to purchase a home, it’s also problematic when you are trying to buy a car or start a business. But bankruptcy – which is sort of a way to legally put up the white flag and surrender to creditors – doesn’t mean you can’t completely start over. There are a number of ways you can secure a home after filing. Here is how to purchase a home after filing bankruptcy.

Your first step in purchasing a home after filing bankruptcy is to completely rebuild your credit. You could start with not making the same mistakes you made that led you to bankruptcy, but most importantly, always pay your bills on time. After bankruptcy, there are many credit card companies that are willing to approve people who want to get back on their feet. After you get your card in the mail, be sure to remain cautious and to always pay your bill at the end of the month.

Next, save your money. You are going to need it when you put down money on a home. Usually, a lender will want a large down payment if the person has had a more than shaky financial past. If you have gone through bankruptcy, you can pretty much guarantee that you will need a sizable down payment. And instead of keeping all your money in a checking account, perhaps it is wise to keep it in a higher earning savings account. If you are in one of the Canadian provinces, you can use RateSupermarket to find and compare different rates for saving accounts –

Furthermore, it is also important to maintain a stable income. Lenders will want to see that you have been making a decent monthly income for at least a year – some might even want to see records for two years. If this is the case, and you are trying to purchase a home, it probably isn’t wise to look for a new job. Even if your job is unbearable, it is recommended to hang on – at least until you secure escrow. Moreover, you only want to change positions if you know you will make a comparable income to your previous job. The last thing you want to do is default on a loan.

Lastly, you might have to play the waiting game. It usually takes two to three years after a bankruptcy for a lender to even consider someone for a home loan. But this isn’t the end of the world – it can afford you plenty of time to get all your ducks in a row. While you might be eager to move into the home of your dreams, it is important after a bankruptcy to wait. All good things come to those who wait – even those with terrible credit.


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