While straight bankruptcy is a last resort for many homeowners, it doesn’t mean it’s the last chance to own a home. Getting rid of your debt burden with a Chapter 7 bankruptcy gives you a fresh financial start. With wise planning, determination, and sound legal advice, you can purchase a home in less time than you might think.

Save for a Down Payment

If you went through foreclosure and the mortgage debt was discharged in your bankruptcy filing, you can get a mortgage under Fannie Mae guidelines after only two years. However, the guidelines may require you to wait three years if you have more than one bankruptcy in your past. Either way, the waiting time is a good time to save for your down payment and build your credit score. 

Making a large down payment helps you obtain a lower interest rate and monthly payments. A 20% down payment shows lenders that you are serious about your purchase and have a track record of saving and managing money since you filed for bankruptcy. For a Federal Housing Administration loan, you might only need 3.5%, and Veterans Affairs loans don’t require a down payment at all. However, the more you pay upfront, the more you save on future interest payments.   

Rebuild Your Credit

A Chapter 7 bankruptcy remains on your credit history for 10 years. If you apply for a mortgage during that time, expect to pay a higher interest rate than in the general marketplace, especially if you apply soon after your discharge. Waiting longer allows you to improve your credit rating and position yourself for lower rates. Smart steps include obtaining a secured or traditional credit card and paying your bills on time and in full each month.

Filing for bankruptcy can be an immense stress reliever, enabling you to become a homeowner. Attorney Harry B. Zornow in Hamilton, OH, offers 30 years of bankruptcy law experience to help you make the right decisions before, during, and after your discharge. To schedule a consultation in Butler County, call (513) 737-9770, or visit the law office online to learn more about his services.