In 2016, there were nearly 800,000 non-business bankruptcy filings in the United States. Families file for bankruptcy every day. Many people do not understand what this means, and consider it to be a huge occasion that will forever change their life.
While it is true that filing for bankruptcy does matter, it does not totally limit your ability to purchase a home. The American Dream is still within reach even if you have had a bankruptcy case. Read on for more information.
Wait a While
Bankruptcy stays on your credit report for up to 10 years, but many do not find a need to wait that long to purchase a home. After filing for bankruptcy, it is a good idea to take stock of your assets. You should know what debts you have, if you still have any. Certain bills, like car loan payments, are likely to survive many forms of bankruptcy.
You are going to want to get your financial house in order before you consider buying a home. Pay your bills on time, every time. Building up a history of timely payment is important and helps to rebuild your credit. Financial institutions need to trust you.
If you lose your home through foreclosure, you will have to wait a bit longer. Foreclose makes the process more difficult, but buying a home is still possible.
After you have gotten your budget under control, it is a good idea to accumulate as much capital as you can. Having a rainy-day fund can help with emergencies, but more importantly, you need to start saving up for the down payment on your house.
When people have filed for bankruptcy, it takes more for financial institutions to trust them. Those who make a large down payment not only see reduced interest payments, but they benefit from showing the bank that their investment is significant. There is no bond of faith greater than cash in hand.
Types of Loans You Can Acquire
The Federal Housing Administration provides loans. These loans are backed by the Federal Government. The idea behind these loans is to offer people with less-than-perfect credit a chance to own a home. If you have filed for Chapter 7 bankruptcy, you must wait a period of 2 years from the date the action was discharged. There are additional qualifications. For example, if your credit score is below 579, you must pay 10% of the home’s purchase price as your down payment.
The Department of Veterans’ Affairs also provides loans for those who have filed for bankruptcy. These loans offer a wide variety of benefits, but you must be an active member of the military or a veteran to acquire this sort of loan. Like the FHA loan, there are additional qualifications. You must have a debt to income ratio of no more than 41%, for instance.
You are not only shopping for a house. You are shopping for a mortgage, too. Fees, buy-down charges, and escrow needs are of vital importance. Understanding your mortgage options is just as important as making the right choice of home.
If you have any questions about life after filing for bankruptcy, contact us today. If you are looking for a real estate lawyer in Miami, give Patrick Cordero a call. He is an experienced, resourceful, and talented lawyer. Patrick Cordero has empathy for you, and will personally work on your case to get you the best outcome.