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The greatest thing about bankruptcy is it lets you start over. Now that you have patched up your credit line, paid your debts, and saved up some money, you can already begin putting your money into long-term investments, like a home. Yes, even after bankruptcy, you can be qualified for a mortgage loan.
But first, do a checklist.
Buying a house – especially after the financial problems you’ve been through – should be a careful and well-planned process. Give yourself at least two years to safely get back on your feet, build some savings, and determine your next moves. Ask yourself some important questions:
Do you really need a mortgage loan? Sometimes, renting is a better option for those fresh out of bankruptcy because it saves you from homeowners’ taxes and other home-related fees.
Can you really afford a mortgage? If you are in the process of switching jobs after your bankruptcy, then it is best to put buying a house on the back burner. You need a stable occupation that gives you regular monthly income if you want to comfortably pay your mortgage dues.
Do you need a mortgage loan NOW? If you are living alone, or if your children are still small, you may not really need a bigger home right away. You can still manage to live comfortably in the confines of an apartment. It might be a better idea to channel your money into paying off your debts or into good investment funds – this will help you circumvent your bankruptcy track record and prove to lenders that you deserve a second chance. Also, give yourself more time to save enough money for a good mortgage down payment. Never rush into a mortgage loan. You can probably get better deals if you become more patient.
Are you all set?
But if you answered yes to all three questions and you already have enough financial backing to buy a home after bankruptcy, then congratulations, you are all set. You are ready to take out a mortgage loan. Before you plunge into this big responsibility, however, it’s a good idea to keep in mind two important things.
1. Be realistic.
You are still rebuilding your financial security after bankruptcy, so don’t aim for houses you cannot yet afford. Do your research. Explore all of your mortgage loan options – especially those which are specially-designed for post-bankruptcy borrowers – and find out the best mortgage loan available to you. Understand your debt to income ratio and compute how much you can afford to shell out for a house.
2. Consult brokers.
If you are not mortgage-savvy, it is best to consult with mortgage brokers who can give you accurate estimates of mortgage loans. Talk to them about your post-bankruptcy situation, and ask them what mortgage terms and conditions are suitable for you. A good mortgage broker is knowledgeable about the advantages and disadvantages of fixed rate and adjustable rate mortgages, for example, and is not hesitant to tell you the bottom line. He or she should also be able to give you sound advice as to what mortgage loan term to take. Ideally, you should take a shorter mortgage term because you will end up paying less mortgage interest in the long run. But given your post-bankruptcy financial situation, the mortgage broker may suggest longer payment terms. You will end up paying more interest in the long run, but your monthly amortization will be a lot easier on the pocket. | 
