How soon after Chapter 13 bankruptcy can you buy a new house?

Answer 1

There is no real limit as to when you can begin considering buying a home after a bankruptcy, though it is much more favorable to wait at least two years, while you build your credit back up.

Chapter 13 bankruptcy can remain on your credit report for up to ten years from the date it was filed. However, filing for bankruptcy can actually be somewhat beneficial for rebuilding credit. As bankruptcy eliminates all or most of your debts, your debt to income ratio improves. This means that more creditors will be willing to extend credit offers to you, which will allow you to begin the rebuilding process. Most credit obtained after a bankruptcy will most likely have high interest rates, but if you obtain credit that you can afford to repay, you will begin to see a definite improvement in your credit score.

It is possible to begin the home purchasing process in as few as 18-24 months after filing bankruptcy. To start, you cannot be currently in a bankruptcy proceeding, your case must be decided. To begin the rebuilding process, check your credit report. Make sure that everything that is supposed to be included in the bankruptcy is included. After you've corrected any errors that may be on your credit report, it's time to start rebuilding your credit. Secured credit cards and installment loans are good ways to show creditors that you can again be trusted to pay back money that you owe before trying to jump right into a mortgage payment.

When you are again able to qualify for a home loan, it might come with high interest rates. Don't panic. Try to make a larger down payment to keep the loan smaller, and make sure there are no prepayment penalties. This will offer you the possibility of refinancing at a lower interest rate as your credit improves.