Buying a Home after Bankruptcy
Bankruptcy is a common occurrence. There are millions of Americans who file and they all have their own personal reasons. You may be filing bankruptcy due to a divorce, a death in the family or even a lost job. There are those who simply mismanage their money or do not plan ahead who also end up in a financial mess where bankruptcy is the only real solution to getting out of debt and back on track.
Bankruptcy can affect your future home purchasing, but you still can become a homeowner, even after bankruptcy. When you have your debts discharged the information remains on your report for up to ten years, but a lender will approve your mortgage application usually in as little as 2 years.
You can begin the repair process for your credit score immediately after you have your debts discharged. By applying for credit, even a high interest and low amount credit card can help you after the bankruptcy process. You should use the card sparingly, only charge something small each month that you can afford and then pay off the balance immediately to avoid the high interest charges.
With two or three years of credit repair after the bankruptcy you can obtain a mortgage rate and package similar to those offered to people who have never filed bankruptcy. If you want to apply for a mortgage loan before your credit is repaired, you can still find a lender who will approve you, just with a larger down payment and a higher interest rate.
It is recommended that you do attempt to wait the time period that it takes to correctly repair your credit before applying for a mortgage loan. You do not want to end up in the same situation. When you get approved for a large interest loan with a flexible interest rate, you run the risk of not being able to afford the increasing payments and can again end up back in bankruptcy court. You cannot file again for eight years, so you have a much smaller chance of being able to save your home if you end up in default the second time around.
For information about Illinois bankruptcy laws and regulations or other debt-relief strategies, the Chicago Bankruptcy Attorneys of Zalutsky and Pinski can help. Just call 312-273-1217 from anywhere in the Chicago metro area. The consultation and advice are free, so what do you have to lose?
By Kerrie Neal