A Chapter 13 bankruptcy can have an impact on every financial decision you make in the future, including whether you can buy a home. Although having a bankruptcy on your credit report might make it more challenging to purchase a home, it is not impossible. If you have a bankruptcy and want to look at single family homes for sale, here is what you need to know:
How Does a Bankruptcy Impact Your Homebuying Abilities?
A Chapter 13 bankruptcy gives you a chance to pay off secured debts and gets rid of unsecured debts. Although you might complete your repayment plan with a relatively clean credit report, there is still a bankruptcy filing listed on it.
To lenders, filing for bankruptcy could be a sign that you have trouble meeting your financial obligations. This can make it more challenging to secure financing from a private lending institution, such as your bank.
Finding a lender is just one of the problems you could face. If you have not completed your repayment plan, you still must continue to make on-time payments to your trustee. If you do not, your bankruptcy could be jeopardized. The additional burden of a mortgage payment from the new home could make meeting that obligation challenging.
What Can You Do?
Even though the situation might seem impossible, there is a good chance that you can buy a home. There are several ways you can increase the likelihood that you will be able to. For instance, you should check into receiving financing through the Federal Housing Administration. The government agency has more lax requirements that you must meet to qualify for a home loan.
You also need to make sure you are making all your payments on time. By doing this, you are proving that you can handle the financial obligations that you take on.
If you are passing on the government financing for your home, you need to find ways to make yourself more attractive to lenders. One way to do this is to increase your down payment. Increasing your down payment five to ten percent could be enough to convince lenders you are ready to buy a home.
You should also focus on finding more affordable homes. Work with your real estate agent to find a home that fits your needs and is within your budget. Your agent might recommend less traditional homes, such as foreclosure homes or short sales to save money.