Bankruptcy can create a financial hurdle for many Americans. And while some may think these setbacks are permanent, that’s not always the case. Even those who file for bankruptcy can still reach many of the financial milestones of others who don’t, like buying a home.
Don’t fear lender skepticism
Since a home purchase requires a mortgage, some lenders may be skeptical of those who have a bankruptcy on their credit report. However, many also understand that bankruptcy may be out of some consumers’ control. Whether their crippling debt is due to job loss, divorce or burdensome medical expenses, even the most responsible consumers can fall on tough times.
Do I have to wait before I can purchase?
Typically, those who’ve filed for bankruptcy must wait at least two years before lenders consider their application. But not all lenders are the same and have varying requirements consumers have to meet.
If they wish to purchase sooner, homebuyers can also see if they qualify for an FHA loan.
Is there anything I need to do before applying for a mortgage?
While bankruptcy can leave a black mark on a person’s credit report, that doesn’t always mean their score is entirely accurate. Credit bureaus and other entities can make mistakes too, so it’s still important to double-check. If people find errors in their report that make it inaccurate, they can contact the three major credit bureaus to make adjustments. Those include Equifax, Experian and TransUnion.
When consumers have an accurate and updated score, it can give lenders a better depiction of who the borrower is, which may increase their confidence in the person’s ability to pay.
There is light at the end of the tunnel
A home is one of the greatest financial assets anyone can have. And while those who filed for bankruptcy may have to jump through a few hoops to get one, obtaining homeownership and then benefits that come with it is still possible.