There are times when the only way to get out of debt is through bankruptcy, and there is nothing wrong with using this option if you cannot find another way out of debt. The downside is that you will have to wait a while after filing before you will be able to get a loan to buy a house. If you filed several years ago, here are the best things you can do to qualify for a home loan.
Find out the waiting periods
The first thing you should know is that you must wait a certain amount of time before you even apply for a loan, and this time span is at least two years. With the different types of loan packages available, there are different waiting periods, but two years is a definite amount of time you must wait. There are other loan types that may require waiting longer than this, and you should know that the wait time starts on the date the court discharged your bankruptcy estate. Additionally, the wait time will be longer if you went through a foreclosure with a bankruptcy.
Know what lenders are looking for
Secondly, it's important to know what lenders are looking for in a loan applicant after he or she filed for bankruptcy. One of the main things lenders look for is zero defaults after bankruptcy. In other words, it will not look favorably to a lender if you have missed payments on your credit report that occurred after your bankruptcy.
Lenders also look to see if borrowers are now using their credit lines wisely after filing for bankruptcy. When they examine your credit report, they will look closely at the types of credit lines you have and the balances you owe. They will look favorably on your credit if you are using only a small ratio of your available credit.
Work on your credit
Finally, you should do things with your credit that will rebuild it, such as taking out a personal loan and repaying on schedule. You could also take out a small car loan and make all the payments on it. By doing these two things, you are showing and rebuilding positive payment history, and this will improve your credit score.
If you have done these things and have a good credit score, you should talk to a lender to find out if you now qualify for a home loan.