You have filed bankruptcy recently due to acute financial crisis. Does that mean you can never have your own house? Can bankruptcy force you to stay away from investing in real estate? Possibly not. Bankruptcy will indeed make your job tough, may be a bit too tough but it cannot stop you from purchasing property if you are disciplined and determined enough.
Bankruptcy has a terrible effect on credit score. It stays on your credit score for 7-10 years depending on whether it is chapter 7 or chapter 13 bankruptcy. Your credit score hit rock-bottom and the lenders are reluctant to do business with you. Consequently, you lack the funds necessary to purchase real estate. How can you overcome this situation? Well, here are some steps which you should follow to secure money required for purchasing real estate in the post-bankruptcy period:
Start making efforts to improve your credit. This can be done by taking loans and paying them off in time. However, financial institutions will not lend you money easily. So what is your way out? Try to apply for small loans with lower interest rates. Lenders will grant relatively easily. Now that you have got the loan, make sure that you don’t default on it or fall behind the payments. Once the loan is cleared on time, your credit is bound to improve. Consequently, you will obtain bigger loans required for buying estate with less difficulty.
Some credit card companies may deny issuing you a card after bankruptcy. In that case you can opt for secured credit cards. What exactly are secured credit cards? Well, secured credit cards require you to deposit a sum of money which is equal to your credit line. This reduces the risk of monetary loss for the creditors. They would now happily issue you a credit card and paying the bills in time will improve your credit score.
Next, you look for a co-signer while applying for loans. This co-signer should have a pretty good credit score. This will help you in more than one ways. Having a co-signer will good credit helps your credit score. More importantly, this improves your chances of getting the loan approved in a major way. The creditors are now assured that if you are in financial trouble then the co-signer will pay back the loan.
Down payment is another important thing. Mortgage lenders will use your home as collateral and approve the loan. However, you can avoid this situation by making a down payment. This might take some time since gathering a lump sum is not always easy after bankruptcy. But if you can do it then it might fetch you an unsecured loan.
Remember the above steps and you would be surely able to invest in real estate even after filing bankruptcy.