Getting back into good financial shape after bankruptcy is a long and tedious process, so much so that the idea of home ownership can seem like nothing more than a dream. However, after filing for bankruptcy, there are certain steps you can take to get yourself back on track, and on the road to financial freedom once again.
Complete the bankruptcy process
Until your debt is discharged and organized, don’t begin the process of buying a new home. If you are still in the middle of that process, many mortgage lenders won’t even consider you as a potential candidate.
Rebuilt your credit
Once you finish your discharging and reorganizing your debt, start to rebuild your credit. Any bills or settlements that you have should be paid on time, or arrangements should be made so that accounts don’t go into delinquency. Obtain a secured, low-limit credit card, and keep the balance down to a manageable amount that you can pay down monthly. Make sure to keep track of your credit score, and check it on a regular basis. Although you are entitled to a free credit report once a year via annualcreditreport.com, you can check it as often as you like on Credit Karma.
Don’t acquire too much debt
While it’s a good idea to establish new lines of credit to raise your credit score, acquiring too much debt can have the opposite effect. Lenders look for a certain debt to income ratio before giving you a loan, as they want to ensure that you do not default on your debts again. If you’ve acquired to much debt since your bankruptcy, lenders will see you as a liability.
Save for a down payment
Having money for a down payment is necessary for obtaining a home loan, but the higher the amount, the more likely you are to get better rate. There is also a chance that lenders may require you to put down a large amount since they see you as a liability.
Wait at least two years to apply
Many lenders will not consider giving you a loan until 18 to 24 months has passed since you filed bankruptcy. While it is possible to get a loan sooner, it is best to wait until your credit has rebounded and you are able to get a better interest rate on your mortgage.
Filing for bankruptcy, and then regaining your financial footing afterword is a long and difficult journey. If you find yourself in need of a bankruptcy attorney in Las Vegas to help make the process of filing as painless as possible, contact DeLuca & Associates today at (702) 252-4673.
