By: Patricia Briggs

Currently, millions of Americans have their finances wrecked up by downsizing, job loss, foreclosure and other financial setbacks and are compelled to file for bankruptcy. After bankruptcy things are even worsened and if you are looking forward to buy a home, you face certain financial hurdles which are quite difficult to overcome.

It is relatively easier to get financing after filing for chapter 13 bankruptcy than Chapter 7 bankruptcy as chapter 13 filing stays on your credit report only for 7 years whereas chapter 7 for a longer 10 years. In chapter 13 you follow a repayment plan, the banks and lenders see you as less of a risk in comparison to chapter 7 where you have to liquidate all your nonexempt properties to mitigate the losses.

The good news is bankruptcy is no longer considered a lifelong taboo any more. There are plenty of ways to rebuild your financial position after the bankruptcy debacle. Read on to know more in this regard and learn how to finance a home after insolvency.

Build your credit score

This is a no brainer. After filing bankruptcy, your first and foremost duty is to build your credit rating once again. Put forth sincere efforts to pay all your due bills on time. It will certainly help you to minimize the damage a bankruptcy filing has on your credit score. Take special care of your student loans as paying them down might help you to boost your credit score even more.

Hints:

1. Pay off your bills within the stipulated period of time.
2. Handle student loans with extra care as it can damage your credit worthiness and purchasing power for the rest of your life.

Get a Secured Credit Card

With a blemished credit history it would be difficult for you to qualify for any regular credit card. Its best for you to opt for a secured credit card which is comparatively easier to avail. For a secured credit card you have to deposit a certain amount at the bank which is $500 or less, and you have to use the credit account based on that amount. To qualify for the standard membership procedure of any secured credit card you have to be an adult citizen of the country and should have the ability to supply a deposit to secure your new line of credit. Make sure you pay the balance each month and evade late payment in order to maximize your credit score.

Hints:

1. Apply for a secured credit card from a reputable bansk like Citibank, Bank of America, US Bank, Wells Fargo and the Orchard Bank.
2. To avail a current list of secured credit cards, take online help from www.bankrate.com , www.cardlocator.com, www.badcreditoffers.

Change your spending habits, start saving

Save as much as possible for your down payment. The more you deposit as the down payment the less risk you are, in creditors’ eyes. The banks will be willing to finance you and provide you with viable interest rate and loan terms only if you offer a substantial amount in down payment.

Hits:

1. Be creative to explore different money making ideas which can generate more income for down payment.
2. Curtail expenses where you tend overspend and save some more bucks for your down payment.

Don’t wait too long

Apply for a mortgage right away. Several High-interest mortgages are available just six months after filing for bankruptcy. Hard-money lenders such as commercial, residential, industrial and raw land property types are usually willing to offer loans six months after filing bankruptcy or a foreclosure but will require 20 to 35% down payment. Several banks are out there which are willing to lend a hand to finance homes after filing for bankruptcy.

Hints:

1. To attain a blemish less credit history, Make sure that your payment history is being reported to the three major credit bureaus: Equifax, Trans Union, and Experian regularly.
2. You can review what is being reported by getting your free credit report from this website: https://www.annualcreditreport.com. This is a government mandated FREE credit reporting service supported by the three major credit reporting bureaus mentioned above.
3. Stay away from hard money lenders as much as possible. Be alert while applying for a loan from hard money lenders as they charge quite a high interest rate and the loan terms are not very favorable to consumers.

Try an FHA loan

If you can manage to await two years after filing bankruptcy, you can apply for a loan insured by the Federal Housing Administration (FHA). To qualify for a FHA loan, you need to prove your creditworthiness and illustrate a good credit history after filing for bankruptcy. FHA loans are quite a smart choice and Banks are ready to offer FHA loans as it is usually just a half-point higher than regular loans and are insured by the federal government.

Hints:

1. If you qualify, then apply for a FHA loan right away; you can incorporate the costs of energy improvements into an FHA Energy-Efficient Mortgage as well.
2. FHA has financing for mobile homes and factory-built housing as well, therefore, attempt to make the most of this funding offer.

To conclude, consistency, discipline and self-control are the essential keys to solve this problem. Make sure you make your mortgage payments on time and continue to lift your credit rating.

After a year of regular payment you can propose a new repayment plan to your lenders and ask them to lower their interest rate based on your increasingly good credit.

Thanks for reading. If you liked this article, please rate the article by clicking the stars below.

After the original article on bitter melon was published at this site, we received numerous questions, both through comments as well as through emails on several aspects of Bitter Melon. These questions were the main inspiration for this blog post. 
To get the context, please click this link to read the original article on bitter melon [...]

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