Whether you’re in the middle of the bankruptcy process or are enjoying your fresh financial start, you’re probably wondering what’ll happen when you make another major purchase such as a house or car. Fortunately, a bankruptcy filing allows you the opportunity to reestablish your credit and discharge your debts, making major purchases easier to handle. If you plan on buying a home, practicing proper money management during and after your Cincinnati bankruptcy will make the home buying process much easier.
How to Buy a Home After Bankruptcy
Once you’re debt free, you can enjoy the freedom of a fresh start. Now is the time to rebuild your credit and exercise incredible money management to avoid falling into the same financial habits. The quicker you take advantage of the fresh financial start, the sooner you can purchase a home. To buy a home after bankruptcy:
- Repair your credit. A bankruptcy can impact your credit score by as much as 250 points – and chances are that your credit was already relatively low beforehand. Start with getting a new credit card and staying up-to-date with payments to rebuild your credit. Also, be sure to discuss your credit score as you work with your bankruptcy attorney during the bankruptcy process. A good bankruptcy attorney will do more than simply help you file the required paperwork. Instead, a quality bankruptcy attorney will do whatever he can to guide your financial life, including giving you advice on your credit score.
- Increase your savings. With a bankruptcy behind you, expect to pay at least a 10 percent down payment, so if you want to purchase a $100,000, then be ready to pay $10,000 up front. Of course, the down payment will vary lender to lender, but it’s better to be prepared. Also remember that as your credit improves after your bankruptcy, the down payment percentage is likely to proportionately lessen as well.
- Wait 24 months. Conventional or FHA mortgage loans cannot be taken immediately after bankruptcy. Speaking with your bankruptcy attorney will give you an idea of all the options available to you as well. Fortunately, waiting 2 years also allows you to rebuild your credit.