Buying A Home After Bankruptcy

By: Phonicia Palmer

If you have recently experienced bankruptcy, you might be questioning whether you can still obtain a home loan and if purchasing a home post-bankruptcy is advisable for you.

Although bankruptcy can complicate the approval process for a mortgage loan, it is still feasible to get approved. In fact, there is a growing trend of bad credit loans becoming available.

These are offered by Subprime lenders, who are increasingly aiming to assist individuals with poor credit in purchasing homes after bankruptcy.

This trend is largely due to the continuing rise in bankruptcies and the growing number of people with bad credit seeking home financing.

Here are some compelling reasons to consider buying a home after bankruptcy:

Enhancing your credit score: Regular payments can help improve your credit rating. After the pre-payment penalty period, you may be able to refinance your loan at a significantly lower interest rate.

Easier qualification for loans: 2-3 years post-bankruptcy, you will likely find it easier to qualify for a mortgage loan with a lower interest rate.

Asset ownership: Renting a home essentially means losing your monthly payments. Purchasing a home, on the other hand, means you are investing in an asset that will likely appreciate over time.

Equity loans: After owning your home for about 6 months, you may be eligible for an equity loan to consolidate any post-bankruptcy debt or debt not included in the bankruptcy.

Investment and improvements: Bankruptcy does not discharge taxes and student loans. The extra funds from an equity loan can be used for business investments or home improvements.

Post-bankruptcy spending: With no remaining debt after bankruptcy discharge, the temptation to buy a new home, car, or undertake renovations can be strong. However, it is important to manage finances wisely to maintain debt-free status.