A lot of people are struggling with debt they cannot pay off and they refrain from filing for bankruptcy because they are afraid how the bankruptcy will affect their lives.
One of the most important things younger people worry about is buying a house after a bankruptcy. Most assume that it is highly improbable, down to impossible. However, if you have a good bankruptcy attorney, like https://www.thebklawyers.com/ they can help minimize the impact your bankruptcy will have on your life and owning a house can once again be a real possibility. Here’s what you need to do after a bankruptcy if your goal is home ownership.
Restructure Your Finances
Bankruptcy will discharge some of your debts, which should free up some of your finances. However, don’t be too quick to jump into big purchases right away. Once your bankruptcy is finalized, compare your credit statements from before and now to see what has changed and what you can do to keep yourself afloat on your second try.
Budgeting Is Important
You will need to make some changes in your spending habits. You should have a basic idea about your income per week. Make sure that you pay all of your bills on time and distribute everything else to the priorities like food first and remove all unnecessary expenses. It may be difficult at first, but if you persist, you’ll be much better off.
You should probably get a credit card as well in order to start rebuilding your credit score. However, make sure that you pay it off every month to prevent debt from piling up again.
Start Saving Money
Once you get a basic grip on your finances, it is time to start saving money, particularly if you want to make a big purchase like a house in the future. Make it a habit to put away some money from each paycheck. No matter how big an amount it is, it will grow over time, and that will give you the motivation to continue doing it.
Set a Goal
When buying a house, you need to give some money as down payment, typically around 20% of the house’s value. You should set a realistic goal of when you expect to save that amount of money, as well as determine the budget for your house. Most real estate experts will tell you that you shouldn’t spend more than 28% of your income for this purpose. Make sure that you stay within this budget when choosing a house to buy.
Keep in mind, however, that once you buy a house, you will be dealing with some added expenses as well. If something breaks down, you will need to repair it. The same goes for potential upgrades you want, various forms of insurance and other small fees.
Inspect the House
You should be really careful when buying a house. You don’t know how well it was maintained and what is just a quick fix to increase the house’s value. That’s why a relatively inexpensive house inspection is important. It can potentially save you a lot of money in repairs.
Prepare Your Financial Documents
Your bank will want to see your financial documentation when you apply for a home loan. If you have gone through bankruptcy, you know how rigorous the financial auditing is. Getting your paperwork ready for a bank loan should be much simpler and less strict. However, make sure that your finances are in order and organized, to facilitate the whole process.
Bankruptcy is a big step and one which will follow you for a long time, but it doesn’t have to be the end of your financial stability. If you are careful and disciplined, you can bounce right back and become a homeowner.