While the rules have changed drastically with regard to mortgage lending, it is still possible to get a home after a bankruptcy or foreclosure. The three keys to this are:
1. Credit Restoration. Goes without saying.
2. Documentation of what caused you to have the bankruptcy or foreclosure.
3. A new positive house payment history. Before you get a mortgage, the best thing to do is find a home with creative financing to re-establish yourself. Save all of your cancelled checks as this will be your new "alternative" credit.
A few great creative financing options are:
1. Owner Financing. If the owner has equity, and a heart, you might land a deal here. The best about this is that you will likely have equity when you go to refinance, and a refinance loan is scrutinized less than a purchase loan.
2. Renting With the Option to Buy. You will likely pay slightly above market rent with a rent credit going towards your down payment. Ideal for those who need to save towards a down payment.
3. Lease-Purchase. Similar to a rent with option, in a lease-purchase, you normally establish the price up front, and you become responsible for the property as if you owned it. The key to success here is having enough time to get your credit cleared up to get approved for a traditional mortgage at the end of the lease term.
These deals exist, especially now that there are so many sellers trying to unload investment properties. Just make sure you do your homework so you know you are dealing with the owner and not a "contract owner" as this could cause you more trouble than it's worth - including the loss of your money and the house.
If you need assistance in understanding any of the above strategies of buying a home, than please CLICK HERE to contact us.
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