29 Jan Life After Bankruptcy: Getting A Mortgage
Have you filed for Bankruptcy? Do you want to buy a house or get a mortgage? It is entirely possible to get a mortgage after getting a bankruptcy discharge. If you didn’t already own a home when you filed for bankruptcy, then it is more a function of what your payment history looks like after filing, your income levels and the amount of money you have to put down on the purchase.
Let’s face it, lenders want to give you a loan. You have to give them a reason to do so. If you do not get back on the credit card train like a drug-crazed maniac, then you will be improving your credit score. By making your regular monthly payments in a timely fashion after a bankruptcy, you are showing the lender that you are responsible. If your income can support the amount of the proposed payment including your taxes and insurance, then the risk to the lender of facing a default in payment later is reduced. This means don’t ever buy more house than you need. Generally speaking, your mortgage payments including taxes and insurance should not be greater than 33% of your pay. If you are also able to save up enough to make a down payment, then the risk of foreclosure is also reduced. With your own money at stake, you are less likely to just walk away when the going gets rough.
Why is this so? There are three factors at play. First, with a fresh bankrtupcy discharge, you most likely have no other meaningful debts. Second, since you just filed for bankruptcy, you can’t immediately file again without consequences. Third, with a properly formed post-bankruptcy economic plan, you have the tools to avoid the pitfalls that modern finance sets for the average consumer.