How to Buy a Home After Foreclosure & Bankruptcy

You can buy a new home even if foreclosure and bankruptcy are part of your past.

Buying a home is a very challenging task, and it's even more challenging for buyers who've gone through a foreclosure or declared bankruptcy. If you've had financial hardships in the past that led to the foreclosure of your home, the need to declare bankruptcy or both, you can still purchase a home. It will be a bit more challenging for you than it is for people who've never experienced such hardships, but foreclosure and bankruptcy can happen to anyone. You shouldn't let your financial past stop you from buying a new home.

Instructions

1. Wait a minimum of two years after your previous home is foreclosed and after declaring bankruptcy to purchase a new home. This will give your credit time to recover. During that time, pay your bills on time and work on reducing debts that weren't eliminated through bankruptcy.

2. Meet with a credit counselor. A credit counselor can help you decide how much you can afford to spend on a new home and how much you can pay on a mortgage each month. Getting assistance from a credit counselor will help you learn how to manage your finances and avoid repeating financial hardships.

3. Look into receiving a government-sponsored loan to purchase your new home. Some examples include a loan from the Federal Housing Administration or from Fannie May and Freddie Mac, which are firms sponsored by the government.

4. Understand that you'll need to wait a minimum of three years to purchase a new home if you receive a loan through the Federal Housing Administration.

5. Visit private banks and financial institutions in your area to find out if you can be approved for a loan and what type of interest rate you can receive. In most cases, the interest rate will be higher through a private financial institution than through government sponsored programs, but you should explore all options when buying a home after foreclosure and bankruptcy.

6. Get help from a real estate agent when looking for a home after foreclosure and bankruptcy. A real estate agent can show you only homes in your area that you can afford.

7. Have a house inspected before you make an offer. A professional inspector can make sure everything in the home works properly. This will help you avoid unexpected and costly repairs, which can get you into the same type of financial trouble you were in before.

References

• Rebuild.org: How to buy a home after foreclosure, short sales, or bankruptcy