Buying a home is one of the biggest decisions you will make in your financial life. Mortgage loans aren’t always favorable, especially if you have had trouble with debt in the past. You may have heard that getting a mortgage after bankruptcy is impossible, but the truth is that anyone can qualify for a home despite their financial past.
A bankruptcy and a foreclosure are two marks on your credit history that will impact your ability to obtain a mortgage loan in the future, but neither of these will prevent it from happening. A foreclosure makes a far worse impression on mortgage lenders than a bankruptcy, mainly because a foreclosure is type of debt default that is specific to mortgages; whereas a bankruptcy applies to all types of debts like credit cards and medical bills.
When looking to buy a home after filing for bankruptcy it is important that you take the time to rebuild your credit. Even though a bankruptcy doesn’t damage your credit, defaulted accounts do and chances are your missed debt payments have taken a toll. Spend at least 12 months rebuilding your credit and establishing a positive payment history. Be sure you are saving money to have towards a down payment. The more cash you bring to the table, the more lenders are likely to approve your loan. Also, have an adequate savings account, enough to cover at least 3 to 6 months worth of a mortgage payment in the event of financial emergency.
Following these steps can help boost your chances at successfully obtaining a mortgage loan and maintaining your financial stability as a homeowner.