Despite what you may be feeling, buying a home after bankruptcy is possible.  Not only that, it happens all the time!  So if you’ve dealt with bankruptcy and are wondering how best to move forward, take it from us: you can do it.  Bankruptcy can be difficult to talk about – people have a lot of questions, but are often afraid to ask.  The truth is, bankruptcy isn’t uncommon, and there are good ways to handle it.  So let’s start there.

There are TWO ways to file for bankruptcy:

Chapter 7 Bankruptcy wipes out all charges and debt – you pay back nothing.  You must wait 2 years after discharge before you can apply for a home after filing for Chapter 7 bankruptcy. (This rule applies to all lenders across the board.) Within those 2 years, you must have impeccable credit to show.

Chapter 13 Bankruptcy allows you to negotiate paying it back.  It usually sets a 5 year payment plan to help you do that. With Chapter 13, you can purchase or refinance after making 1 year of on time payments with the court’s approval.  Once discharged, you may purchase or refinance a home after 2 years of discharge.

 

  • Establish positive credit! Don’t let where you are now discourage you – getting back to a great place with your credit is more manageable than you think. A big mistake many potential borrowers make after filing bankruptcy is to not re-establish positive credit.  Obtain a secured credit card and only charge one small item a month on the card, pay it off promptly the next month, and continue on in that fashion.  Before you know it, you’ll be re-building your credit.
  • BE ON TIME. Make sure all your payments are on time! When you are being evaluated for a mortgage later, lenders will be looking at your consistency.
  • Start saving. Open up a savings account for your future down payment and closing costs.  Not only is it something lenders will look for you to have, but you will having something to watch grow – and it feels great to see yourself getting closer to your dream.

 

Feel free to reach out with questions!  We’re a Christian Mortgage Lender who values the same things you do – faith and family.  We’re small enough to give you personal attention, but with big backing that gives us the money to truly give you the best help.  If you’ve dealt with bankruptcy and are looking to buy a home, we’d love to help!

 

Best,

Audrey

The Christian Mortgage Mom

Audrey