Buying a Home

As with any other major purchase, buying a home after bankruptcy will take some preparation on your part. While challenging, it is not impossible to buy your first, or even your second home after filing for bankruptcy, even if you've been subject to a foreclosure in the past. The important thing to remember is that rebuilding credit is a gradual process, and you will need to be prepared to take steps to improve your credit, each step of the way. That said, there are still options available that can help first-time buyers who may have some credit issues with home ownership.

Filing for bankruptcy may actually help you to qualify for a home loan in later years - by eliminating your unsecured debt, you will not have to worry about the balances on your credit cards when it comes to your debt to income ratio. As long as you begin the process of rebuilding your credit after your bankruptcy has been discharged, filing for bankruptcy will not be a barrier to later home ownership. To start, you should ensure that your current credit report is completely accurate - order a copy from each of the three major credit bureaus and make certain that the information on the report is accurate. Correct any incorrect derogatory information before you start searching for your new home.

Once you've ensured that your credit file is accurate and up-to-date, you should consider saving enough money for a down payment on the type of home you'd like to buy. While there are generally no set requirements for the amount of a down payment for any mortgage, most banks will require you to put down anywhere from 10% to 30% of the home's value. For special programs, such as FHA loans, you may be able to put down much less. However, the more you are able to pay initially, the better your house payments will be, and the better your chances of getting the type of loan you want.

There are no guarantees when it comes to the timeframe required after bankruptcy before you can qualify for a home loan. It may only take a couple of years for some, and for others, it may take much longer. It is important to remain consistent in paying your bills - once your bankruptcy is discharged, lenders will look closely to see how you manage your credit in the future. If you demonstrate responsible credit habits and are timely in repaying all of your financial obligations, you will see your credit scores rise sooner, rather than later.

If you want specific advice for your situation, we encourage you to contact us. We offer a free initial case evaluation to individuals seeking information about bankruptcy, and our Los Angeles County Bankruptcy Attorneys are ready to assist you with any questions that you may have. Contact our office today and set up your appointment as soon as possible - don't let your worries about future home ownership deny you the financial freedom and peace of mind you deserve.