Have you had financial troubles? Maybe you have had to file for bankruptcy? If so, you are probably wondering if you will ever be able to purchase a home. Owning a home is the American Dream and can be achieved after a bankruptcy if you do the right things.
If you have a bankruptcy on your credit, it will not be as easy to qualify for home financing but it is possible. Here are some ideas to help you get into your dream home.
Build Your Credit
The bankruptcy is an obvious blemish to your credit. You need to establish good credit to show that you are now a good credit risk for the lenders. A credit card or two is a good way to do this. You want to use them wisely to avoid getting into financial trouble again and make sure your make monthly payments on time. The last thing you can afford are further credit blemishes after your bankruptcy. You may even need to get a secured credit card to establish this new credit. This is done by depositing funds with the credit card company and they issue your credit card against these funds so they are not at risk. Once you have provided a positive payment history, you will be able to have traditional credit cards.
Avoid Debt
A key factor in being able to purchase a home is your ability to afford the house payment. If you pile up debt and payment obligations, you will not be able to qualify to purchase the home you want. It is important to keep credit card and auto payments to a minimum so that you have your income available to qualify for your home.
Save for a Down Payment
When buying a home after bankruptcy, the need for a down payment is that much greater. You will want to put aside any extra money that you can each month. The more money you have to put down, the better chance you have of qualifying for a mortgage. Some ideas for down payments can be to borrow against or cash out a retirement plan or to get a gift from a relative as well.
It never hurts to apply for a home loan and see where you stand. You may get surprised and get approved sooner than you thought you could. Even if you do not, you can get some valuable feedback on the areas you need to work on to get approved.
If you are unable to get approved for a loan today, you may want to consider a lease option on a home or finding a seller who is willing to provide seller financing. This way you can get into a home now and then do a refinance loan later when you have established your credit and financial situation.