6 Steps to Buying a House After Bankruptcy


A bankruptcy remains on your credit report for up to 10 years. During this time, it may be difficult for you to obtain credit. However, you can recover after a bankruptcy. In fact, it is possible to purchase a house after filing a bankruptcy.

The key is taking steps to rebuild your credit history, and maintaining a good relationship with future creditors.

Step 1
Wait 18 to 24 months. You can buy a house one day after a bankruptcy discharge, but this normally results in higher rates. Postpone buying a new house for at least a year and a half. Use this time to reestablish credit.

Step 2
Apply for a secured credit card.
To reestablish credit, you will need to obtain a new line of credit. Apply for a secured credit card, which is designed to help people without credit or bad credit. Banks, credit unions and credit card companies offer secured cards.

Step 3
Pay your bills on time.
Once you have obtained a new line of credit, pay your bill on time every month to build a good credit history. Late or missed payments reduce your FICO score.

Step 4
Keep your balance low.
Excessive debts contribute to bankruptcy. Practice wise credit habits and keep credit card balances below 25 percent of the credit limit. If possible, pay balances in full every month, and use cash for most purchases.

Step 5
Save money for a down payment.
You may not acquire 100 percent financing with a bankruptcy on your credit report. Save money for a down payment of between five and 20 percent of the purchase price.

Step 6
Compare mortgage lenders.
Shop around and request home loan quotes from at least three lenders. Then you can obtain the lowest rate and best deal on the mortgage. Use a mortgage broker to speed the process. They work with different lenders, and they will help you find the right mortgage program.

Original article by Valencia Higuera.

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