Declaring bankruptcy eliminates your ability to borrow money, apply for a new credit card, and even take out a mortgage on a home. Fortunately, with proper preparation, financial planning, and patience, you may be able to purchase a home sooner than you anticipated.
The following are helpful ways to buy a home in the near future after declaring bankruptcy:
- Discharge your bankruptcy and then organize your credit report. Once your bankruptcy is discharged, you must take a look at your credit report to see that any debts that you paid back still appear on the report. If so, contact the credit agency and have these errors corrected. If you still in the process of discharging your bankruptcy or in the middle of credit counseling, there is no way a mortgage lender will speak to you.
- Use installment loans or secured credit cards. Whether you use it for a car, school, or personal funds, an installment loan is where you make monthly payments. A secured credit card gives you credit limited to the amount you have on deposit with the bank issuing the card. So, if you have $400 to place in an account, then the bank will limit your credit each month to the deposit amount of $400.
- Wait two years (at least). While you may be able to receive a mortgage sooner, but in regards to terms (such as interest rates), it won't be as appealing as they would be if you waited 24 months. Because you may be paying that mortgage interest for a maximum 30 years, you will save money if you wait long enough after the discharge to get a great interest rate.
- Apply for a mortgage. Once the two-year waiting period is over, ensure that you are completely prepared to apply for a loan. Your lender will want you to meet specific requirements before agreeing to lend you money, such as a good debt-to-income ratio and job stability.
If you are interested in knowing your available legal options with regards to bankruptcy in Richmond, contact Bruce W. White, P.C. today.