Bankruptcy is one of the financial situations surrounded by numerous myths which can make you give up. One of such common myths is that you may not own a house after declaring bankruptcy. Are you one of the many people whose minds ring with the can I buy a house with a Bankruptcy question? If you are, our property managers from Ogden will not mind giving you an accurate solution to the issue.
What are the common myths about bankruptcy home investments?
Financial experts say that filing bankruptcy is one of the stigmatizing financial crises that you can ever experience. This is because of the many bankruptcy myths that might make you feel miserable in your financial endeavors.
For instance, most people think that bankruptcy will lock you out of receiving a mortgage to finance your home. Regarding this issue, our property managers in Ogden say that a bankruptcy will affect your credit score for a period. However, you still stand a chance to receive a home mortgage in case you embark on building your credit score after the discharge period.
Another common myth associated with bankruptcy is that your creditors will claim your new home after a bankruptcy. According to our property managers, any property acquired after filing bankruptcy cannot be acquired by your past creditors.
So, can I buy a house with a bankruptcy? The truth is that bankruptcy does not prevent you from the purchase of a home. However, if you are planning to purchase a home through a mortgage, our company recommends that you first consider repairing your creditworthiness since most financial providers will use your FICO score to approve or deny credit.
How can I improve my credit score after bankruptcy?
From the legal perspective, it takes up to 10 years before the national credit bureaus clear bankruptcy from your credit report. However, this doesn’t imply that you are barred from improving your credit score. Below are some tips that can contribute to improving your credit score in the preparation of buying a home.
1. Request for a copy of your report from the national credit bureaus
The first step to fixing your credit score after a bankruptcy is to get the most recent copies of your credit report. Go through the report to identify your financial mistakes and or any discrepancies within the report. Make sure to contact the credit bureaus in case you come across inaccurate information that affects your credit score.
2. Embark on rebuilding your weak credit score
Our property management experts recommend that you use your past mistakes to learn how you can prevent future bankruptcy. For instance, if your bankruptcy resulted from a medical emergency, we would recommend that you invest in a good health insurance provider. On the other hand, you might want to improve your financial management skills if your bankruptcy is associated with poor financial management.
The next important step in rebuilding your credit score is to get a loan or apply for a credit card. After securing a loan, make sure that you pay it within the stipulated time. This tactic will help you to start rebuilding your financial trust with creditors. You are likely to see the fruits of this tactic if you maintain a good loan repayment history.
Besides taking a loan and getting a credit card, you should also ensure that you pay your bills on time, avoid closing your unused credit cards and don’t apply for a credit card that you don’t want to use. You may also want to hire a credit repair company to help improve your credit score.
How can I buy a house with a bankruptcy?
Are you still concerned with the ‘how can I buy a house with a bankruptcy’ question? Here is the way out.
After improving your credit to a winning credit score, we recommend that you start shopping around for a mortgage to help you kick start your home buying project. Our property management experts say that most lenders can give a mortgage to bankruptcy filers two years after the discharge period.
Some of the mortgage loans that you ought to consider include:
1. Federal Housing Administration Loan
Then Federal Housing Administration Loan is a state issued mortgage issued to citizens who are looking to build a new home or those who want to repair their homes. Our Keyrenter property manager recommends this type of mortgage because of it low down payment and low credit score requirement. As such, this might be a great option when you are recovering from a bankruptcy.
Some of the requirements of getting this loan include:
- A credit score of 580 and above.
- 3.5% down payment.
- You may also need a property appraisal from a recognized facility.
- You must be employed for at least two years.
- You must have spent two years out of bankruptcy.
2. USDA Loan
If you are not lucky to secure the Federal Housing Administration Loan, then USDA is another alternative to consider. Our Keyrenter Northern property management company recommends this loan for our low or middle-income clients who are recovering from bankruptcy.
You may want to secure this mortgage because its interest rate is low and you could receive it without making a down payment. Legible candidates, however, will have to demonstrate that their bankruptcy was beyond their control and they must have spent three years after a bankruptcy discharge.
3. Veteran Affairs Loan
If you are a US veteran, the Veteran Affairs loan is an option that you might want to consider. The good news with this mortgage is that you can qualify for it regardless of your credit score, and you won’t make a down payment. You can only qualify for this loan two years after the bankruptcy discharge.
Filing a bankruptcy can be a distressing situation to any person. However, the situation should not end one’s dreams of owning a house. After the discharge period, you can focus on improving your credit and later on apply for a mortgage to buy a new house. It is our hope that you have found an accurate answer to your ‘can I buy a house with a bankruptcy’ question.