Buying a house after filing bankruptcy is a real possibility after a year. With two years, your bankruptcy often is disregarded by financing companies, qualifying you for good credit rates. As with any mortgage, compare lenders APR to get the lowest costing home loan. Wait Two Years For Good Credit Waiting two years gives you enough time to reestablish your credit history. Most lenders will also ignore a bankruptcy two years or older. So your credit score could be good enough to qualify for a conventional loan. It is also a good idea to check your credit report before applying for a mortgage. You can get an annual free report from any of the three reporting agencies. Credit monitoring services also provide reports along with your credit score. Check that all accounts included in your bankruptcy are closed. Also look for any errors in payment history and resolve them with the credit reporting agency in writing. You may also want to include a letter explaining the circumstances leading up to the bankruptcy. In some cases, such as job loss or illness, financing companies will make exceptions for such circumstances. Improve Your Application You can also improve your application to qualify for lower rates. A large down payment can make a big difference in rates. While there are 100% financing for subprime loans, rates are high. 20% or more will ensure you get the best rates possible. Another option is to choose an ARM instead of a fixed rate mortgage. ARMs offer the lowest initial rates, qualifying you for a larger loan. The one drawback is that rates can potentially increase. Shop Conventional Lenders First Even with a bankruptcy, you may qualify for a conventional loan with their low rates. It is a good idea to start collecting mortgage quotes from several lenders, both conventional and subprime, before settling on one. Online sites make this chore simple. A few hours invested in researching lenders and their rates can save you thousands. Its time well spent. |
