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Will I Ever Be Able to Purchase a New Home if I File for Bankruptcy?

Posted on in Effect Of Bankruptcy

TX bankrutpcy lawyerMany people who are struggling with overwhelming debt often hesitate to file for bankruptcy because they are concerned that the bankruptcy will have a significant impact on their credit score for a number of years. They worry that the bankruptcy will prohibit them from ever owning their own home someday. While it is true that bankruptcy will show up on a person’s credit report, it is important to keep in mind that consistently having late payments, missed payments, and charged-off accounts hurt a person’s credit score and their chance at owning a home more than filing bankruptcy will. As long as the person who files for bankruptcy follows these tips, homeownership is likely closer than they think.

Review Your Credit Report

Once your bankruptcy has been complete and debt discharged, you will want to obtain a copy of your credit report to make sure that there are no incorrect debts that should have been discharged showing up. The major credit reporting agencies are required by the federal government to provide people with a free credit report once a year. If you see any discrepancies, make sure to contact your bankruptcy attorney.

Rebuild Credit

Once all your debt has been discharged through bankruptcy, it is important to focus on rebuilding your credit. Remember, your credit was not damaged overnight and it will take time to rebuild.

Paying Bills on Time

The biggest mistake people who file bankruptcy make is immediately falling right back into old patterns of missing payments or accumulating new debt. This will have an immediate negative impact on your credit score and will definitely make it much more difficult – if not impossible – to find a lender willing to give you a mortgage for a home.

Save for a Down Payment

Most legitimate lenders require a down payment when purchasing a home. Typically, banks and mortgage companies require at least 20 percent of the total purchase price of the home as a down payment. Since bankruptcy has discharged all of your debts, this is a good time to really be diligent about saving money toward your dream home and not spend it on items you really do not need.

Find a House You Can Afford

There are multiple websites online that offer mortgage calculators which will help you determine just how much you will be able to afford each month based on your income and other factors. This will give you a good idea of what price range you should be house shopping in.

Shop Around for a Lender

Before you shop for a house, you should shop for a lender. Make sure to verify what each lenders’ requirements are. Some of the factors you should be checking include:

  • What is the minimum credit score borrowers must have?
  • How many years after a bankruptcy filing can a borrower apply for a mortgage?
  • What is the interest rate they charge?
  • What is the minimum down payment they require?

Let a Boerne Bankruptcy Attorney Help

If you have a lot of debt that you are struggling to keep up with and are looking for a fresh financial start, contact a dedicated Kerrville bankruptcy lawyer to find out what types of bankruptcy options you may have. Call the Law Offices of Chance M. McGhee at 210-342-3400 to schedule a free and confidential consultation.

Sources:

https://www.annualcreditreport.com/index.action

https://www.nerdwallet.com/article/mortgages/payment-buy-home

Call Today for a FREE Consultation

210-342-3400

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