What You Should Know About Buying a Home After Bankruptcy
It’s a common misconception that if you’ve filed for bankruptcy, your credit is destroyed for at least 10 years, possibly longer. While bankruptcy will likely lower your credit score by up to hundreds of points, it is possible to start rebuilding your credit shortly thereafter so you can become creditworthy in the eyes of mortgage lenders within as little as two years and can receive a home loan.
Tie up any loose ends – Obtain copies of your credit reports from Experian, Trans Union, and Equifax and examine them to make certain that all of the items covered under your bankruptcy have been updated to reflect that you no longer have a balance with that creditor.
Slowly rebuild your credit – You can begin this process by applying for a secured credit card about six months after you’ve received your bankruptcy discharge. Next, you can establish unsecured credit or an installment loan. But remember, it’s very important that you take things slowly in order for this process to be successful.
Be timely with bill payments – Now more than ever, it is critical that you establish healthy credit habits by paying all of your bills on time each month. This is the only way you can prove to lenders that you are an eligible borrower.
Start saving – Devote a realistic portion of your income to a savings account. Consider it a vital monthly expense after all bills have been paid. This may require cutting back on entertainment and other unnecessary expenses, but it is a sacrifice worth making.
Establish a budget – Do not set your sites on a home you cannot afford. Instead, beg realistic about your budget limitations as that the key to ensuring that you maintain financial wellbeing.
Look into FHA or VA loans – While you may not qualify for a conventional mortgage for several years, it is possible to qualify for a loan backed by the Federal Housing Administration (FHA), or if you or a family member is a former military member, a Veterans Assistance (VA) loan.
To find out if you may be eligible for home loans on Long Island in spite of a bankruptcy proceeding, contact a Cliffco Mortgage representative today.