Preparing to purchase a home in Missouri requires careful planning, especially after going through a bankruptcy. Contrary to what some would have you believe, just because you filed for bankruptcy does not mean you can never buy another home. There are plenty of creative ways to rebuild your credit in preparation for buying a new home. Understanding the next steps can help you proceed with confidence as you continue to take control of your future and create a better life. Northland Bankruptcy Law has the experience necessary to help you navigate the bankruptcy system and obtain a fair and just financial recovery. Read on to learn more about how bankruptcy impacts the obligation of your cosigners and guarantors to pay your debts and what you can do to protect them.
After a recent or past bankruptcy, most people want to get on the path toward establishing good credit. To accomplish this goal, some choose to purchase a home. While a new home purchase is a good way to rebuild credit and increase your credit score, purchasing a home after a recent bankruptcy may result in higher interest rates and fees.
Establishing Credit after Bankruptcy
A bankruptcy will remain on your credit report for seven to ten years. During this time, purchasing a new home, car, or obtaining a credit card with a prime interest rate will be tricky. Nonetheless, you need to establish or rebuild your credit. When lenders review your credit application, your score is a key determining factor in whether you are approved. If you have not opened new credit accounts since your bankruptcy, lenders cannot accurately judge your creditworthiness.
There are many ways to re-establish credit after a bankruptcy. Getting a gas station charge card or a credit card is an option. If you cannot get approved for an unsecured credit card, consider applying for a secured card. Typically, this involves putting a down payment on the card.
When Should You Apply for a Home Mortgage Loan?
If possible, delay applying for a new home loan for at least two years following your bankruptcy. This will allow you ample time to rebuild your credit and boost your credit score. By doing this, you may qualify for better or comparable interest rates.
Several lenders will approve a mortgage loan application not long following a bankruptcy discharge. Unfortunately, the interest rates on these loans are several points higher than current market rates. This rate increase will significantly increase your monthly mortgage payment.
How to Get Approved for a Home Loan after Bankruptcy
Fortunately, it is possible to get a home loan following a recent or past bankruptcy. If you are applying for a loan before re-establishing credit, contact at least four sub prime lenders and obtain online quotes. While the rates you receive will be high, you can always refinance in two years for a better rate.
If you have established new credit accounts, frequently check your credit report. If you pay your creditors on time and avoid late payments, your credit rating will improve considerably. After two years, begin contacting mortgage lenders. Likewise, you should also obtain several quotes. To speed up the process, apply through a mortgage brokerage site. A single online application will produce multiple quotes from many different lenders.
Call Northland Bankruptcy Law for Help With Your Bankruptcy!
Are you currently struggling with debt? Are you searching for a way to put a stop to creditor harassment? Has a recent financial hardship placed you in a position where you may be facing foreclosure, wage garnishment, or car repossession? No matter your financial situation, Northland Bankruptcy Law can help guide you to a more stable financial future. For a more comprehensive list of all the questions you might have about bankruptcy, and for a free consultation, please call (816)-452-1800. If you have further questions about your case, do not hesitate to reach out to us by the phone number, through the contact form, or by emailing [email protected].