When you file for bankruptcy, it can be hard to get any kind of loan. But it's no longer impossible to get a loan, even just a few days after a bankruptcy is over. But is it smart to get a loan soon after filing for bankruptcy?
After a bankruptcy, when you have no more debt, it can be tempting to buy a new house, car, etc. You might think that you can pay for a bigger house payment. Here are some things to think about before you make a new house payment.
Pre-Payment Penalty: Almost every subprime loan (a loan for people with bad credit) now has a penalty for paying it off early. This fine is usually equal to about 6 months of mortgage payments. Most of the time, the pre-payment penalty period lasts two to three years. This means that if you want to refinance or sell your house during that time, it will be very hard, if not impossible, to do so. That means you can't get out. Once you sign the papers for a mortgage, you have to make those payments. If you don't have enough money saved to pay the pre-payment penalty, you have to keep making payments or lose the house.
Mark of Two Years: Remember that it will be much easier to get a mortgage loan after two to three years have passed since your bankruptcy was over. With a small down payment, you might not even have to pay a penalty if you pay off your mortgage loan early. So, if you are about six months away from the two-year mark. It would be smart to wait until more mortgage loan options are available.
Putting yourself in a position to fail again? Taking out too much debt? - If you do decide to buy a house. Buy one that you are sure you can pay for. Don't use up all of your credit and live right on the edge of what you make. If you lose your job, you'll need to make sure you can still pay your house payment. Don't spend more than you need to on a home.
