It may be difficult to buy a house or get any credit after declaring bankruptcy; however, once you give yourself the time to recover financially and rebuild your credit, you will see that there are opportunities everywhere. While the unstable real estate market and the shaky economy have created greater challenges for anyone looking for a loan to buy a home, doing so is still a possibility. Buy a house after declaring bankruptcy saving all the money you can to pay the initial fee.
Rebuild your credit
- Pay the bills on time. Start making timely payments for all your accounts immediately after declaring bankruptcy. This will improve your credit automatically.
- Use a credit card and pay it monthly. After your bankruptcy, get a credit card with a low limit and use it to make minor purchases that you can pay monthly in full.
- Review your credit report Pay attention to your score to monitor improvements. Look at your report at least once a year to make sure there are no incorrect items that hurt your score.
Save money for the initial amount. You usually have to pay a high initial amount before they agree to give you a mortgage.
Protect yourself from other debts. Do not ask for additional loans while you are thinking of applying for a mortgage. Lenders will want to see low levels of debt in your financial reports.
Keep your income level constant. Lenders will look for reliable income when they consider your mortgage application, especially after you have declared bankruptcy. You can contact http://aliandco.org.pk/ for further help if you want to buy a new house for yourself and loved ones.
- Try not to change jobs until your mortgage has been approved. Stability is important and being in the same job for at least two years will help you.
Wait at least two years before applying for a mortgage. Most studies have shown that lenders want you to wait between 18 and 24 months after you have unloaded your bankruptcy to consider giving you a loan.
Find a lender. Once you have repaired your credit, have demonstrated financial stability and saved some money, look for a lender who is willing to give you a loan.
- Consider obtaining a loan from the Federal Housing Administration. These loans are generally more flexible for people who come out of bankruptcy than those that traditional lenders offer.
- You must be honest about your bankruptcy. The lender will find out about your past financial problems as soon as you get your credit report. Anticipate and explain the situation to the lender and highlight what you have done to improve your credit and your financial health.
Prepare to pay a higher interest rate. Probably your bankruptcy will make your mortgage more expensive, at least at the beginning. If you pay a high initial amount, you can make the loan less.
- Make sure your mortgage does not have a penalty for advance payments. Maybe you should refinance your mortgage within a few years as your credit continues to improve and the penalties for advance payments charge you a fee for this refinance.
Buy a house you can afford. Make sure the monthly payment is appropriate for your budget. Most lenders seek that the monthly amount does not exceed 30% of your income.
- Use a mortgage calculator to determine the amount of the monthly payment after making the payment of the initial amount including the interest rate. Try Bankrate.com or other financial websites.
- Consider applying for a mortgage with a co-applicant who has not filed for bankruptcy. Even though your credit history will also be taken into consideration, having an economically stronger partner in the loan may help you get better terms in the contract.
- You must take care of the predatory lenders. Although it is increasingly difficult for predatory lenders to offer bad mortgages to people who do not qualify, there are still some credits that you should take care of. Avoid any loan with extravagant fees and costs that cannot be explained. It also avoids mortgages with variable interest rates, which increase your payment after 1 or 2 years.