In 2017, there were 767,721 personal bankruptcies filed in the US. If you've filed for bankruptcy as well, you're not alone. However, you can definitely rebuild your life after this devastating period.
In this article, we'll discuss life after bankruptcy; specifically, buying a house.
Your Goal Is Closer Than You Think
Bouncing back from bankruptcy may feel impossible. But if you work hard at it, you can regain control over your credit and accomplish everything you've ever wanted to achieve.
Think it takes more than a decade to get your credit back in order so you can purchase a house? Think again! The main thing is that you take care of all your finances and rebuild your credit as efficiently as possible.
Buying a House After Chapter 7 Bankruptcy
Chapter 7 bankruptcy allows a person to receive a discharge of unsecured debts. Typically, you'll need the help of a bankruptcy attorney to correctly get all of your affairs in order.
If you’ve maintained timely payments and raised your credit score after your Chapter 7 Bankruptcy you may qualify for a traditional mortgage sooner than you think! Depending on your credit score, you might qualify as early as two years after your bankruptcy is complete. If your bankruptcy was due to circumstances beyond your control you could qualify in as little as one year.
If you want to purchase a house without waiting for 2 years, you can try for a subprime loan. However, these come with high-interest rates, so it's best to wait for a traditional mortgage instead.
Buying a House After Chapter 13 Bankruptcy
With Chapter 13 bankruptcy, you work with a bankruptcy lawyer to repay some or most of your debts in a specified time frame, which is typically 3 to 5 years.
People who file for Chapter 13 instead of Chapter 7 usually can qualify for a traditional mortgage 24 months after their bankruptcy has been discharged. Keep in mind, this means 5 to 7 years after your initial bankruptcy filing, and is contingent on you maintaining good credit. Note also, it is possible to obtain court permission to purchase a home while you’re in an active Chapter 13 case. Your attorney can assist.
Other Things to Consider
The most essential thing when it comes to purchasing a house after bankruptcy is showing you can be financially responsible. It's definitely vital that you raise and maintain your credit score, this means that you should pay secured debt timely and that you do not overextend your credit again after declaring bankruptcy.
A tip to raise your credit score is to keep revolving balances on credit cards and lines of credit usage under 30%. Obviously, the higher your credit score, the better interest rate you'll get. So even though you can qualify for a traditional mortgage with a credit score of 640, try to raise it to 720 or above to get a better rate.
You should also start putting away some extra money with each paycheck to apply towards a down payment. While you can qualify for an FHA loan with just 3.5% down, or traditional mortgage with 5% down, you'll be paying a lot less interest if you can make a down payment of 10 to 20% instead.
Get Back on Track With An Experienced Texas Bankruptcy Attorney Today!
Life after bankruptcy can be difficult, but it doesn't mean it's impossible to achieve your dreams. With the help of a reputable attorney, you can regain financial control and get your life in order.
If you're considering bankruptcy and concerned about when you’ll be able to purchase a house, get in touch with The Law Office of Marilyn D. Garner by calling (817)381-9292 for a FREE consultation today!