Filing bankruptcy or losing your home to foreclosure does not mean the end of the road for financial success afterwards.  It can be scary to even think about buying another house, but it is not impossible! Check out these tips to help you back on your way to homeownership: 

 

  • Probably the most important thing to do is to pay all of your bills on time and in full. This will get your credit score climbing back up to a number that will look good to lenders. 
     

  • The bankruptcy process begins and ends with required financial courses.  Ask for a fee waiver so the added costs are not a burden. 
     

  • If your last home went into foreclosure, there are waiting periods for applying for a mortgage: three years for FHA loans, seven years for Fannie Mae/Freddie Mac loans, two years for Veterans Affairs loans, three years for USDA loans, and other lenders have different waiting periods. 
     

  • The homebuying process is different for those above-mentioned agencies when it comes to past bankruptcy. It simply depends on the type of bankruptcy filed. 
     

  • Going through a short sale may be a different situation, but this process has a waiting period as well. The average wait time to apply for a mortgage is two to seven years. 
     

  • Some financial institutions may ask for an explanation–in writing–about the situation that led to the foreclosure or short sale, as well as what you learned during the process.   
     

  • Extenuating circumstances, such as a major illness or job loss, can make a difference in how long you have to wait to apply for a mortgage.  Be prepared with any paperwork that shows your loss of income or increase of debt. 

 

 

Courtesy of Chester County PA Realtor Scott Darling. 

Photo credit: The Gottman Institute