Can You Still Buy a Home after Declaring Bankruptcy?
Declaring bankruptcy is often a decision that people will do everything in their power to avoid. Though it is not an ideal financial decision, a lot of people are discovering that they can recover and rebuild their financial stability after declaring bankruptcy.
One financial hurdle that people who have a past record of bankruptcy need to get through is finding their perfect home to live in. Renting may seem like the only option with a bad credit history, but there are some ways to own a home again. Here are some tips for buying a home after declaring bankruptcy.
Talk with a local real estate attorney to learn more about the market
A great first step to prepare for the home buying process after recovering from bankruptcy is to talk with a real estate attorney. These attorneys, like North Tampa Law Group, a Tampa real estate law firm, can help a person weigh what their options are based on the market in the area they are looking to buy in. For example, an area that is seeing a slow decrease in home prices may be more lenient with past credit history. Real estate attorneys can help people take advantage of these opportunities to buy a home.
Be prepared to wait for a good loan
In some cases, it will take some time for a person’s financial record to recover from their bankruptcy decision. A person who makes this decision should prepare themselves to possibly wait for their record to clear and for them to build back the credit history that they want to have. Typically, people will need to wait 2 to 4 years after their bankruptcy action is discharged before taking on any new loans. This can be frustrating, but it can be the ideal opportunity for a person to build their wealth and establish a reputable credit score.
Secure some stable income
Anyone who is looking to make a big purchase, like buying a home, should try to secure at least one source of reliable income that they can use to boost their chances of getting a good loan rate. For example, those who are self-employed with income that is not always consistent or guaranteed may not get the low rates a person who works for an established business would get. Consider these options when preparing for the home buying process.
Clear all other credit report marks
In addition to the bankruptcy, many people will have additional negative marks on their financial record that can prevent them from getting a home loan. If a person cannot do anything to reverse their bankruptcy, it is a good idea to try to clear all other negative marks on their credit history in order to give themselves the best possible chance of securing a new loan. This often is as simple as making a few phone calls to past creditors or working with a credit agency to remove past discrepancies that may be harming their credit scores.