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TheStreet Open House

How to Get a Home Loan After Bankruptcy

If you've suffered a bankruptcy, that doesn't necessarily mean you can't get a home loan. The key is having patience and doing the work needed to get banks interested in lending to you again.

So let's tackle the issue of getting a mortgage after a bankruptcy, and see what tips and strategies work the best.

Think positive. Maybe the number one roadblock to getting a mortgage loan after a financial disaster is the (understandably) common mindset that nobody wants to lend you money right now. This is not necessarily true. In fact, it may be easier to get a home loan after a bankruptcy than it is for simply having bad credit. But you have to recognize that all is not lost and that you have to take concrete steps to put you in the best financial position.

Adhere to your bankruptcy conditions. The first concrete step back on the road to good credit is to honor your bankruptcy. In other words, make the payments you're supposed to make, and make them in full and on time.

Use your bankruptcy time to clean up your credit. Typically people in financial distress can get a home loan after even one year of bankruptcy (if you declare Chapter 13 bankruptcy). With other forms of bankruptcy, it might take two years to qualify for a home loan. Use that time to repair your credit, pay your bills, and hit the credit "refresh" button.

Here's a tip: A secured credit card is usually easy to get and can start you back on your way to good credit. Use it sparingly and pay it off (once again) on time and in full. A good record of timely payments on a secured card can be the first big step in restoring your credit and qualifying for a home loan. Aim for a credit score of 650-and-up to better your chances for a home loan.

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