Attempting To Find Home Financing After Bankruptcy

Individuals who are likely eligible to file for bankruptcy often do not want to

, because they feel it could make it too hard for them to obtain a home in the foreseeable future. It may be more and more difficult to find a lender prepared to take the chance on you, and the rates might be higher. But, it always isn't unachievable to buy your dream house after individual bankruptcy.

After declaring Chapter 7 or Chapter 13 personal bankruptcy, it is necessary you take a few steps before trying to buy a home. Understand that after a individual bankruptcy your credit worthiness will take a very good hit, though if you had the desire to file, it was likely already pretty low. Keep in mind, that credit scoring agencies will certainly report your personal bankruptcy and keep it in your file for 10 years. From a lender's standpoint, your history shows that you are a low credit score risk and approving a loan large enough to buy a house would not appear to be in their best interest.

The very first thing you must do is work on cleaning up your credit report. Following the release of your bankruptcy, obtain a copy of your credit report and make sure that anything on it that really should not be there is removed. You need to contact the three credit reporting agencies to make this happen. The Fair Credit Reporting Act provides specific rules so that you can maintain a precise report.

It is advisable to begin rebuilding your credit report and you can accomplish this by applying for a couple of credit cards that accept individuals with a low credit score. Yes, the interest rates will be higher than you might be used to, but the benefit can be a higher credit score. You can even attempt to obtain installment loans via numerous agencies, and above all, if you are able to obtain this kind of credit, make certain every payment is made on time.

Using this method may be slow at first, but you will have to show lenders that you've cleaned up your act and are a sensible person worthy of home financing. It will take up to two or maybe 3 years to build up your credit rating before lenders will be willing to supply you with a mortgage. So, be patient during the process and think about starting to rebuild your credit the second after your individual bankruptcy has been approved. Thinking ahead gives you the best chance for a good rate later on.

by: Tom McAvity

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