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Going bankrupt for the first time after my husband became unemployed due to the corporate down turn, we believe we may go back into the market of buying a home however I suspect our recent credit failure (after always having great credit) may now not allow us to do so. After 25 yrs of marriage and building our credit, I can say the system is broke and does not work. We lost a lot of money last year when our home was foreclosed on due his income going away.

3 Thoughts on How do you get back into the market of buying a home after going into bankruptcy due to a year of unemployment?
  1. Reply
    October 14, 2011 at 11:43 pm

    You can still get loans to buy a home. There are a lot of family trust making loans and private mortgage companies that don’t have the stringent requirements of the banks.

    Private money cost a percent or two more than banks because they are willing to take a greater risk and loan to people with credit ratings less than what the banks require.

    But lets get real here, a few years ago, everyone was paying the banks 9-10%. so paying a private lender 6-8% is still very reasonable.

    Or, you can look for Owner Financed properties. Sometimes listed in sale ads as Owner Will Carry (OWC) or Land Sales Contract (LSC). You buy directly from the seller and don’t use a lending institution.

  2. Reply
    David Z
    October 15, 2011 at 12:30 am

    well the system has its issues but you and husband were living on edge if you did not have enough emergency savings to to handle his job loss. that was your decision to not have money set aside.

    Talk to a lender about what is possible. You will likely have to wait 3-4 years, but the amount you will put down may have an impact. If you can put 20% down the time you have to wait may be less.

  3. Reply
    October 15, 2011 at 1:23 am

    He will not be able to get a mortgage for 2 years after his final discharge. You can still qualify. The question now is income. Do you have income to qualify. After a chapter 7 it is wise to make whatever payments you have on time to try and rebuild your credit. After about two years of doing so you can get FHA type financing. If the foreclosure happened before bankruptcy it is a another mortgage killer. If the house was in both of your names, you both have a foreclosure on record. Foreclosures and short sales hurt your credit more than bankruptcy. With a foreclosure you may not be able to get a mortgage for 4 years or so. In the current environment you are going to need a credit score in the 700 range to even qualify for a mortgage. Just don’t go out and get a 12 percent mortgage that you can’t pay.

    Tim Cook

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