How to qualify for a home loan after bankruptcy: Many people have found themselves in dire financial straits after losing their job and having to file bankruptcy. After the initial shock and going through the bankruptcy process, many people start wondering if and when they will be able to qualify for a home loan. While it may be very difficult to get a home loan immediately after your discharge, it is possible to qualify within a few years.
The first step to getting a home loan after bankruptcy is to make sure your credit reports from the 3 major credit bureaus is correct. Once a discharge notice has been received from the court, the creditors will usually update your credit report that your debt has been included in your bankruptcy and is now discharged. Wait four to six weeks, and request your credit reports from all 3 bureaus. Examine all of your accounts and make sure they show they have been discharged in the bankruptcy. If you find some accounts that have not been updated, file an objection with the credit reporting bureau and give them a copy of your discharge notice.
After your credit reports have been updated to properly reflect your bankruptcy, you need to begin the process of obtaining a small line of credit or credit card. The idea of immediately getting a credit card does not always sit well with some people, but you must remember that a positive credit rating is usually required to get a home loan. You should look for a card that has no upfront fees and possibly no annual fee. At this point you just want a small card, something to carry a small balance from month to month to rebuild your credit. Once you have been approved for a card, do not apply for other credit lines or cards. You want to keep the number of requests for credit to a minimum. Check your credit reports after a few months of having the new card and make sure it is being reported as a positive credit rating.
If you have paid your one credit card on time for 18-24 months, now is the time to start talking to lenders about qualifying for a mortgage. You want to be honest and upfront about your bankruptcy. You will be able to show you are financially responsible with the credit card you do have. Talk to more than one lender as lenders have different qualification requirements. It is usually advisable to avoid any lenders that were discharged during your bankruptcy.If you already have a relationship with a local financial institution, such as a checking or savings account, they are also a great place to talk to a lender about qualifying for a home loan.
Getting a home loan after bankruptcy is possible, it just takes a little work, and maintaining a positive credit rating after the bankruptcy is complete.