Home Loan After Bankruptcy

Given that we are living with a difficult economy, many people are finding themselves in a precarious financial position. More so than in recent memory, individuals are facing the serious threats of foreclosure and even bankruptcy. Rightfully, this gives rise to concern for their financial health and future. Many people wonder what their life will be like after getting into serious trouble with credit. They envision a life without benefit of any form of financial assistance due to poor credit history and repayment performance. They worry about applying for a home loan after bankruptcy and often assume that they will be placed in a position of either renting or buying outright.

The good news is that it is certainly possible to be approved for a home loan after filing bankruptcy. The caution that precedes that good news is that there is a lot of work to be done, on the part of the potential borrower, in order to present their situation in its best possible light. If one is willing to take all of the required steps, obtaining a home loan after bankruptcy can be a feasible goal.

The first step to getting a home loan after bankruptcy is to analyze and repair one's credit. The primary resource to be used here is the credit report. Requesting a copy of one's credit report (preferably from all three reporting agencies) allows for comparison against bankruptcy discharge documents. Make sure that all creditors that were discharged are either removed from the report or showing a zero balance outstanding. Keep all documentation related to a bankruptcy as it will be required in the eventual home loan application process.

Once the credit report is in order, it is time to start building the foundation for an after bankruptcy filing home loan. Be vigilant about paying rent on time – a mortgage payment will one day replace the lease payment and potential lenders may likely request a verification of rent. Show a strong history of timely payments. Next, ensure that ALL regular bills and obligations are also paid on time. It is crucial that credit is re-established with a clean slate. One might also consider doing some research and applying for a secured credit card to demonstrate positive usage and payment habits. If one doesn't exist, open a savings account and make regular deposits.

With credit on the road to repair, there are many home loan after bankruptcy lenders to be considered. Some of these are known as BCD lenders because they are willing to consider borrowers with blemished credit histories. Lenders like Mortgage Direct, Gulfstream Financial, Fieldstone Mortgage and Charter One are among those known to work with compromised borrowers, i.e., those with less than an A rating.

Finally, a FHA loan after bankruptcy or VA loan after bankruptcy will more than likely pave the way to home ownership. A FHA loan after bankruptcy can be considered two years after the bankruptcy discharge date or three years after a foreclosure. This waiting period is exactly what is needed to follow the aforementioned steps to repairing credit and putting one's financials into the best possible shape for approval consideration.