Can you buy a home after filing bankruptcy?

Discover if you could possibly buy a home after filing bankruptcy. Learn more about what mortgage lenders think about bankruptcy filers.

After filing for bankruptcy in Florida, people may feel as if their financial future is bleak. They now have this major black mark on their credit. However, it is important to not throw in the towel too fast. Everyone can rebuild their credit after filing bankruptcy. In fact, it is even possible for a person to buy a home.

Waiting periods

When it comes to buying a home, there are waiting periods that lenders put in place. While these vary greatly, The Mortgage Reports notes the standard waiting period is about four years for a conventional loan. If a person is looking into an FHA loan, it could require waiting two years. These waiting periods vary, often from case to case, so a person may qualify sooner or have to wait longer depending on his or her personal situation.

When it comes to FHA loans, there is an additional hurdle. Oftentimes, the system the FHA uses to run credit checks may show old information. A person may have to dispute the findings and clear them up before being able to start the process of securing an FHA loan.

Reestablishing credit

One of the most important things for a person to do if he or she wants to buy a home after a Chapter 7 bankruptcy is to rebuild credit. One of the biggest misconceptions about filing for bankruptcy is that it will ruin your credit and your financial future. After filing for bankruptcy, you can begin restoring your credit immediately. Paying your bills on time and in full, creating and sticking to a budget, applying for a secured credit card, starting a savings account and opening a new bank account can all demonstrate financial stability and help you rebuild credit. Any good reports that a person can add will go a long way to help. The key is to ensure only good marks and nothing negative, according to Realtor.com. It is also important for a person to not go wild and open too many new accounts. One is sufficient to do positive things.

Last steps

Finally, right before a person starts the process to get a mortgage loan, he or she should get reports from all three major credit bureaus (Experian, Equifax and TransUnion) to look for any issues. You can download these for free at annualcreditreport.com. Sometimes holdovers from the bankruptcy can remain and will need to be resolved.

People should also prepare a letter for the lender explaining the details of the bankruptcy, including why they filed. Lenders look more favorably upon those with extenuating circumstances, such as an illness, loss of a job or the death of a spouse, which caused financial hardship and led to the bankruptcy. If you are trying to buy a home after a bankruptcy, it could be beneficial to get some legal advice from the experienced Miami bankruptcy attorneys at Kingcade Garcia McMaken.