Buying a House After Bankruptcy - Things To reconsider

What do you want of Home Loans After Bankruptcy ?.

It can be tempting to buy a new home, new car, etc., after a bankruptcy removal you have no debt left. You will probably feel like you can afford a larger house payment. Here are some factors to consider before committing yourself to a new house payment.

Home Loans After Bankruptcy

Pre-Payment Penalty - practically every subprime loan (bad prestige loan) now comes with a pre-payment penalty. This penalty is regularly about 6 months worth of house payments. The pre-payment penalty duration regularly lasts 2-3 years. That means, if you want to refinance or sell your house in that duration of time, that will make it very difficult, if not impossible to sell or refinance. That means that you are locked in. Once you sign those mortgage papers you no ifs ands or buts have to make those payments. If you don't have the amount of the pre-payment penalty in savings, you are locked into making the payments or losing the house.

Two Year Mark - Keep in mind that after 2-3 years from the date of the bankruptcy discharge, mortgage loans will be much easier to get. With a small down payment, you might even be able to get a mortgage loan without a pre-payment penalty. So, if you are within 6 months or so from the 2 year mark. It would be smart to wait it out and have more mortgage loan options.

Setting Yourself Up For Failure Again? Borrowing Too Much? - If you do determine to buy a house. Buy one that you know you will be able to afford. Don't max yourself out on credit, living right up to the edge of your income. If your income suddenly drops, you'll want to make sure that you can still afford your house payment. Be conservative with how much home you need to buy.