If you just went through bankruptcy, you may wonder if you can still get a home loan. You may also wonder if it's a good idea to buy a home after going bankrupt.
Even though a bankruptcy can make it harder to get approved for a mortgage loan, it is still possible to do so. In fact, there are always more and more loan programmes for people with bad credit. Subprime lenders are putting more effort into helping people with bad credit buy homes. This is mostly happening because the number of bankruptcies is still going up and more and more people with bad credit are looking for home loans.
Here are some reasons why you might want to buy a home after filing for bankruptcy:
- Raise your credit score. When you pay your bills on time, your credit score goes up. Once your prepayment penalty period is over, you should be able to refinance your mortgage loan to get a much lower interest rate. After your bankruptcy has been over for at least two to three years, you should find it much easier to get a mortgage loan with a lower interest rate.
- Build up equity in your home. If you're just paying rent, your monthly payments are going to waste. When you own a home, the value of your home goes up over time, and you work toward having an asset.
Take Out An Equity Loan To Consolidate Debt Or Get Extra Cash: Once you've bought your house, you might be able to take out an equity loan on it about 6 months later and use the money to pay off any other debt you've gotten since your bankruptcy or that couldn't be included in your bankruptcy. Taxes and student loans won't go away when you file for bankruptcy. You could also use the extra money to start a business or make improvements to your home.
