Purchasing a Home After Bankruptcy
One of the biggest concerns on the minds of those considering filing for bankruptcy is whether they'll be able to buy the house they've dreamed of owning post-bankruptcy. For many, it seems like an impossibility, but it's not. It's true, though, that most lenders are going to want you to wait at least two years after receiving your bankruptcy discharge (i.e. forgiveness) before they'll consider giving you a mortgage loan.
Once the 2 Years is Over
Once that two-year waiting period is over, however, it shouldn't be too hard to get financing for a home, possibly even 100% financing. How can you achieve this? By making a concerted effort to make all bill and credit payments after bankruptcy on time. Also, saving up enough to make a down payment on the home should make it even easier to get a home loan after bankruptcy.
Trying to get a mortgage loan after bankruptcy but prior to that two year period will probably be a lot trickier. You'll pretty much have to have a down payment saved (even as little as 3-5%), along with a flawless payment history post-bankruptcy discharge. You may find that it's worth it to wait that two-year period and make sure to save up for a down payment while paying all your bills on time.
Ways to Obtain a Down Payment After Bankruptcy
There are ways to obtain a down payment for a post-bankruptcy mortgage besides saving up money you may not yet have available in your bank account.
Ask For a Gift From Relatives
Maybe you know that someone (your parents or grandparents, for example) intend to leave you money upon their passing. Or perhaps your relatives have been offering for years to help you with your financial problems, but you haven't wanted to trouble them. It's perfectly okay to accept a gift from relatives to finance the down payment. Just remember that the lender is going to ask where the down payment is coming from, and you cannot lie about this--if the "gift" is really a loan you have to pay off, you must disclose that to the lender.
Down Payment Assistance Programs
Down payment assistance programs like Neighborhood Gold or the Nehemiah program may be able to help you. These programs aid the seller in providing you with a down payment. While it's illegal to accept a down payment from the seller of a property, with these programs, it is legal. Just make sure you have proper advice from a real estate agent or attorney to make sure everything is on the up and up. There are also other down payment assistance programs, usually grants that do not require repayment which you can check into.
Cash Out Your 401K
You may have the option of cashing out a 401(k) or other investment to use as a down payment, though you'll want to take into account any penalties early cash-out may incur.
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