There is hope still for those that have had a recent bankruptcy on their credit and who still wish to buy a home, but it may require financing to own the house. One should realize that all is not lost when it comes to learning how to buy a house after bankruptcy. The effect of having bad credit is that it only serves to put more emphasis on the other two factors governing how to buy a house after bankruptcy, which are income verification as well as a down payment.
You Must Wait Two Years Following Bankruptcy
If one has become bankrupt, lenders normally require the borrower to wait for a minimum of two years from when he or she went bankrupt before making their application for a mortgage loan. Once this two years waiting period has been served out, lenders will normally offer loans and finance should not be difficult to obtain.
Of course, it does require affirmation from the credit bureau to attest that the debtor’s payments have been paid on time after the discharge of his or her bankruptcy. However, if the debtor wishes to obtain a mortgage loan prior to the two years waiting period having been completed, he or she will need a flawless payment history from the time of his or her bankruptcy discharge.
Thus, how to buy a house after bankruptcy will require having a good and certified credit standing that has been consistent ever since the bankruptcy was discharged, and it may even be helpful if the debtor is able to pay a down payment, which even as small an amount such as three to five percent as a down payment will help to further the cause adequately.
Other methods open, when one is considering how to buy a house after bankruptcy, are to borrow or ask for a gift from relatives. Having financed a house, it is always possible to go and take out a second or third mortgage up to the total value of the house, and then pay back the loan from relatives. However, one should always be honest with lenders about the source of the down payment; otherwise dishonesty could lead to it being treated as defrauding the lender.
Another option one can consider regarding how to buy a house after bankruptcy is down payment assistance programs such as Neighborhood Gold or the Nehemiah program, which basically aid sellers in helping the debtor with down payments. It is legal to receive a down payment from these sources but it is illegal to receive down payments from the seller of the property.
Finally, with regard to how to buy a house after bankruptcy, one may also consider cashing out a 410K or another investment, and repay with a second or third mortgage after the loan gets closed. These days, mortgage loans following bankruptcy are not so hard to come by, and there are many bad credit mortgage lenders who will provide loan assistance in this regard.