Author: Ron Spencer Real Estate   February 18, 2016

After going bankrupt, buying a home can seem pretty impossible. Bankruptcy can temporarily ruin the dreams you had of buying that home you’ve had your eye on. Going bankrupt will prevent you from being able to borrow money or use a credit card. Because of this, your credit score can be drastically lowered which is not good if you wanted to begin the process of buying a home. Although it may seem like a challenge, it is possible to build your credit back up and get the loan that you need to buy a home. If you’ve recently gone into bankruptcy, here’s what you can do to get back on the right track and get back into the home buying process more quickly.

Discharge the bankruptcy. The first thing that you will need to do after going bankrupt is discharge the bankruptcy. If you don’t do this, there’s no chance that a mortgage lender will even meet or speak with you. After discharging the bankruptcy you will want to organize your credit report. Go through your report carefully and make sure that there are no mistakes; if there are any mistakes, make sure you contact your agency and get them corrected. Remember that free credit reports are available through many online agencies.

Prove that you’re reliable. Proving yourself to lenders is going to be huge after going into bankruptcy. You need to start rebuilding your credit, showing lenders that you are able to pay back the money that you owe them. They need to be able to trust you. You can start rebuilding your credit through secured credit cards and installment loans. These two options ensure that you will pay off only amounts that you can afford. Aside from paying off your loans, you have to be smart when it comes to your daily money use. Don’t use a lot of your credit, pay your bills on time, save money, and remove any outstanding tax liens.

Be patient. As mentioned above, rebuilding your credit can be challenging and will take some time, so you must be patient. You aren’t going to be able to get back into the home buying process as quickly as you would like. Unfortunately, it is suggested that you wait at least two years after you discharge your bankruptcy to apply for a mortgage loan. The reason for the long wait is because the longer you wait, the better the interest rates will be.

Apply for a loan. After rebuilding your credit over the course of two years, you will finally be able to apply for a loan. As long as you worked to rebuild your credit and your financial reputation, the lender should be happy to give you a loan. Remember that a lender will look for stability in your job, money in the bank, no bounced checks, assets, and a good debt-to-income ratio.

Although it may seem like a long and trying process, it is possible. Have the patience and strength to take your time in rebuilding your credit and your reputation. The more money you save the better. The more time you take to save money and build credit the smoother the home buying process will go for you.

Source: http://www.realtor.com/advice/finance/buy-home-bankruptcy/

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