Essential Steps to Buying a Home After Bankruptcy

Buying a home after bankruptcy is not going to be easy. Once you come to terms with that, and still want to move forward in your quest to buy a home (and I strongly recommend that you do), you must take some important steps to prepare yourself and help the process. Repairing credit, learning from your mistakes and saving money are important to bring you to the point of a home purchase. These steps will help you in buying a home after bankruptcy:

STEP ONE: Repair Credit Reports.

Yes, that is an "s" at the end of reports. You must work at, and clean up all three credit reports, as lenders will evaluate all three when applying for a mortgage.

You can view an article about cleaning up negative remarks on your credit reports here: www.associatedcontent.com/article/1065650/removing_negative_remarks_from_your.html.

STEP TWO: Create a realistic budget.

Too many people today fall into the trap of immediate gratification. The see something they want, and they buy it. Now. They just figure they can pay it off later. However, with the extreme rise in bankruptcy and foreclosures, it has become clear that avenue is no longer working. We are also in the era of "keeping up with the Jones'". While you may want that large, 5 bedroom, new construction home on 3 acres, you may only be able to afford the 1950, 3 bedroom home in the neighborhood.

Try to be realistic, and look on the bright side as well. If you don't let yourself become "house poor", you will have more room in the budget for the fun things in life, such as travel, season tickets to your football team, or even that big screen TV you have been wanting.

STEP THREE: Save a down payment of at least 20% of the home you want to buy.

Yes, it is a lot, but well worth it. First of all, with a bankruptcy on your record, you may be required to put 20% down anyhow. Secondly, you will avoid paying PMI, or private mortgage insurance, which often results in $50 - $100 a month extra in your mortgage payment. Third, this teaches you the value of money, and the value of your home.