Buying a Home After Bankruptcy is Now a Reality

Filing for bankruptcy terribly affects your credit score, but it’s definitely not the worst thing that can happen to you. Remember, nothing lasts forever. This financial instability is temporary, and it will gradually evaporate with time.

If you intend to buy a home, say within couple of years after filing for bankruptcy, most creditors would reject you. Does that mean you can’t get a home? As I mentioned earlier, bankruptcy is not the worst thing that can happen to you. You can think of buying a home after bankruptcy, and you can easily avail it.

But how can I get a house? My credit score is in terrible condition? No one, absolutely no one would entertain my request to buy a house? It will take at least seven years for me to avail a mortgage and buy a new home.

People often think in this manner as they don’t know much about the other options available which can help them to get a home quickly, even days after filing for bankruptcy.

First way is a lease-option. As the name suggests, it allows you to lease the house, along with an option to buy it. I know it’s quite difficult to save money immediately after bankruptcy, but if you can manage to accumulate a reasonable amount, you can get the best deal. This method, however, asks for a high down payment. Hence, if you intend to buy a home on lease-option, you will have to save a big amount.

Second method is to own the seller’s mortgage. If a party intends to sell a house, but some amount of mortgage is unpaid, you can pay the repaid amount to the seller and take over the mortgage to get the ownership of the house. This is one of the best and most practical ways for buying a home after bankruptcy. It’s called seller’s refinancing.

These methods are generally not known to common people as most of us contact real estate agents. They will definitely not inform you seller’s refinancing as they wouldn’t get any commission on this deal.

Another way, a pretty lengthy one, is try to improve your credit score before you think about buying a new home. You can avail few secured credit cards and loans, and pay them back on time. This would gradually increase your creditworthiness. Lenders, however, are quite particular about mortgage these days. They have made the process quite difficult for people who don’t enjoy good score. This is because they are now left with many foreclosed homes after the sub-prime crisis, and they do not want more such homes.

Though the last option is quite a tough one, buying a home after bankruptcy is easy if you adopt any of the initial two methods.