Home Buying After Bankruptcy
Many people think they'll never be able to buy a home after bankruptcy and that is no longer the case. It does take some explaining and some planning but for most it is possible you just need to be patient and you will be able to achieve.
There are several different chapters in bankruptcy but for most people you will only need to be concerned with Chapter 7 and Chapter 13. You will file one or the other.
Chapter 7 is total bankruptcy. In this bankruptcy you liquidate everything, your property, car and all other things of value which will be sold to pay your creditors. Sometimes your existing property is exempt and if so, you need to pay your mortgage as your lender can foreclose if you don't. Once the bankruptcy is discharged most lenders will lend to you after two years. If you happen to find a lender that will lend to you before that be sure you are aware of the terms and you are comfortable with them.
Chapter 13 is a reorganization of debt, it stays any foreclosure action and you enter into a repayment plan that is affordable according to your budget. This repayment plan is can be 3 to 5 years generally. After your bankruptcy is discharged you will be able to borrow for a new home after a year. The only exception to this is if you are an U. S. Veteran.
There is a FHA Fresh Start loan available where you can be approved one year after bankruptcy but you need to prove:
- the bankruptcy was caused by circumstances beyond your control such as debt from medical emergency or a death in the family.
- Income was reduced by at least 20%
- the circumstances leading to the bankruptcy are not likely to be repeated or reoccur.
None of these are insurmountable and with patience you could be on the road to home ownership at most two years after your bankruptcy. Just be sure to pay your bills on time throughout your bankruptcy so that you can show alternative credit for utilities, rent, cell phone and any other recurring bills you may pay.
If you are thinking of buying or selling an home in Maryland give us a call at 410-292-0100 or start your search here and we'll talk about the market conditions and what your home could possibly be worth in today's market place if you are thinking of selling. If you are considering buying a home, there is no better time than now to buy. The tax savings and wealth building alone is worth the plunge into todays market. Remax New Beginnings and I are connected with some of the brightest and best real estate agents in the world and can assist with your move here in Maryland or anywhere in the United States or abroad. Ask me how.
June Piper-Brandon ~ Associate Broker ~ CDPE, CIAS, ePro, MRP
Remax New Beginnings