Bankruptcies and Buying a Home

A lot has been written about filing for bankruptcy. It’s not the first choice most people might make, but when there is no other choice you might have to consider this option. The question I hope to answer in this article is if it is possible after filing to obtain a home mortgage loan.

You can obtain a mortgage loan, but there is one important thing to remember. Most attorneys do not tell people when filing bankruptcy is YOU CANNOT HAVE ANY LATE PAYMENTS AFTERWARDS if you are trying to obtain home financing. This is a hard, cold fact. Most attorneys simply take your money and do the filing. They literally have turned filings into a high volume business.

If you doubt this simply open the Yellow Pages in your respective town or city and see how many ads scream out ” Bankruptcies Filed For As Little As $300!”. These lawyers simply don’t have the time to get personal because of the competitive nature of this particular legal arena. Now before some attorney out there reads this and gets excited let me state that there are still those lawyers who will take your case and give you all the counseling time you desire. Of course everything comes with a price. You decide what’s right for you.

Let’s assume you’ve filed and the bankruptcy has been approved. Fast forward a couple of years. You’ve recovered from whatever circumstance that caused you to file. You’ve managed to save quite a bit of money and feel ready to apply for a mortgage loan. Will a company take the risk on you? The chances are that you can get approved, but may have to live with a higher interest in the beginning of the loan. An interesting thing I’ve learned is that it’s easier to get a home loan than a car loan after a bankruptcy. The reason for this is you cannot get in your home and take off for parts unknown. The bank knows it can at worst foreclose on your home and recover it’s loses.

One bright side of this sad subject is the fact that after a couple of years your credit should have drastically improved to the point where you can refinance the original loan at a much lower interest rate.