If you have recently filed for bankruptcy, you may be wondering if you have a chance of being approved for a loan to purchase a home. It can be difficult trying to bounce back after you have filed for bankruptcy. You may also be wondering if buying a home after bankruptcy is the best option for you.
Although it is more difficult to get approved for a mortgage after you have filed for bankruptcy, it is not impossible. The good news is that you do not have to put your aspirations to owning a home on hold. You will have to find a lender who is willing to work with you, and you should be prepared to pay a higher interest rate. However, there are several reasons why you should consider buying a home after bankruptcy.
Buying a Home after Bankruptcy Will Increase Your Credit Score
When you make your mortgage payments on time, your credit score will begin to increase. After your prepayment penalty, you should have the opportunity to refinance your home loan at a lower interest rate. Once your bankruptcy has been discharged for three years, you should have a much better chance of getting an even lower interest rate.
If you are paying rent, you are not buying into an asset. You are simply throwing money away every month. On the other hand, when you purchase a home, the value of the home will hopefully increase over time. Your money will not be wasted; it will be an investment into property that you own.
Apply For an Equity Loan
After you have bought your home, you may be able to take out an equity loan to help consolidate your debts and/or give you some extra cash. This may be the solution you need if you have debts that the courts did not discharge in your bankruptcy. However, it is important to remember that financial obligations such as student loans and taxes cannot be discharged.
You can also use the extra cash for home renovations or for starting a new business.
Buying a home after bankruptcy can be one of the steps that can help you rebuild your finances. During this rebuilding period, you can track your progress by monitoring your credit score and making all payments on time.
Learn more about your home purchasing options after filing for bankruptcy by scheduling a free consultation with us today.