As the real estate market undergoes one of the most upsetting turnovers in the history of the free world, aspiring homeowners are silently grieving and burying the dream that, apparently, will never come true – homeownership.
As the real estate market undergoes one of the most upsetting turnovers in the history of the free world, aspiring homeowners are silently grieving and burying the dream that, apparently, will never come true – homeownership. Is homeownership still possible? Some say yes and others say no. Some say you need an 800 credit score and others say the process is just too hard: you need to provide the lender with 20 percent down, your bloodtype and a promise to sign your youngest child into slavery to prevent a mortgage default! While the industry has tightened up a bit – gone are the days of going to your local mortgage drive-thru window, ordering a 30-year-interest-only- “no doc”- loan with a prepayment penalty on the side, and moving into your nightmare on dream street with a payment that clearly exceeds your budget – the good news is “Yes, you can get a mortgage and own a home.” From Bankruptcy to Beach House Okay, maybe not a beach house but surely you can own a home after bankruptcy. In fact, with the recent changes in bankruptcy laws causing more individuals to file a Chapter 13 Bankruptcy, which means you have to repay your debts, over a Chapter 7 Bankruptcy, which means you wipe the slate clean, many fail to realize you can get approved for a mortgage before the often misquoted four-year waiting period. Plus, there is no minimum credit score! Here’s how you do it: Buying After a Chapter 13 Bankruptcy You don’t have to wait three or four years until your Chapter 13 is paid off. You can actually get approved for a mortgage while you are in the repayment period! As long as one year has elapsed, you have made all of your Chapter 13 payments on time to the trustee, you pay your rent on time each month and you have not acquired any additional derogatory debt, you can get into a home with as little as 3.5 percent down and in some cases with zero down for qualified homebuyer assistance grants! Buying After a Chapter 7 Bankruptcy If you are able to show that your bankruptcy was due to circumstances beyond your control (medical illness, divorce, job loss), you may be eligible to buy a home one year after your Chapter 7 is discharged and get approved for a low down payment mortgage. Otherwise, you must wait two years. Additional Tips During this waiting period, it is important that you pay your rent on time, rebuild your credit cautiously and avoid any new derogatory collections or credit issues. Continue to save at least 10 percent of your income each pay period, and use this second chance that you have been given wisely: build wealth through real estate and maybe someday soon, you’ll be in your beach house after all! ______ Copyright 1999-2009, Lynn Richardson. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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