After a recent bankruptcy, many people assume that purchasing a
new home is impossible. No doubt a bankruptcy is extremely
damaging to your credit history, and most lenders are not eager
to loan you money or extend credit. However, there is good news
for the millions of people who file bankruptcy each year.
Contrary to popular opinion, homeownership after bankruptcy is
very attainable.
Delay the Home Buying Process
Although it is possible to get approved for a home loan one day
after a bankruptcy discharge, financial experts, and mortgage
lenders do not recommend this maneuver. You can expect to pay
ridiculously higher interest rates and fees immediately
following a bankruptcy.
The key to getting back on track financially is establishing new
credit accounts. However, it is wise to start with smaller
accounts, as opposed to a home mortgage. These may include
accounts that you can pay in full each month. For the most part,
you should delay the home buying process for at least 24 months.
During this time, open new credit accounts and establish a good
relationship with your new creditors.
Improve Your Personal Credit Rating
By opening new credit accounts and establishing new credit
relationships, you will boost your overall credit rating.
Following a bankruptcy, most people have very low credit scores.
A low credit score warrants denials for credit cards and loans.
Moreover, a low credit score will forfeit the opportunity to
attain prime rates.
During the two years following your bankruptcy, strive to
increase your credit score. This will take time. The best way to
increase your personal credit rating is to avoid paying your
bills late. Furthermore, avoid too much debt. Maintain small
credit balances, and try to payoff your credit card balances
each month.
Make a habit of regularly monitoring your credit report. It is
recommended that consumers attain a copy of their credit reports
about every six months. As you open new credit accounts, and
maintain a good payment history, this will be noted on your
credit report. If errors are present on your report, contact
your creditors and the bureau to resolve the inaccuracies.
Using Sub Prime or High Risk Mortgage Lenders
A bankruptcy will remain on your credit report for approximately
ten years. During this time, most lenders will not offer you
prime or low interest rates. To avoid paying higher fees, you
must finance your home with a subprime lender. Sub prime
lenders specialize in high risk loans and mortgages. Their goal
is to get you the best financing package for your circumstances.
More Information:Visit
http://www.abcloanguide.com/ for more details.
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