The housing market is becoming increasingly appealing to many aspiring homeowners. Now that the economy has been recovering steadily for a few years, mortgage rates are low, but new construction and buyer interest is picking up. However, the idea of buying a home after bankruptcy can seem daunting for many Americans. Is it smart to pursue a new mortgage loan in the wake of bankruptcy? And what can you expect from the process? These are both reasonable questions.
Understand that after several years, the consequences of bankruptcy will fade from your credit report, provided that you have not done further damage to it as a result of other debt-related issues. However, many Americans recovering from bankruptcy understandably desire to pursue a new mortgage loan in between the time that they file for bankruptcy and the time during which their past debt issues no longer affect their ability to obtain credit.
If you want to pursue a new mortgage loan during this period of time, understand that if you are granted a loan, the interest rates on the loan may be far higher than if you wait until your credit is more stable. In addition, it is wise to seek the counsel of an experienced attorney when you are considering a new mortgage at this time. Fees, unexpected costs and other financial consequences of signing a new loan may be buried deep within the text. An attorney can help you determine whether or not accepting the loan's terms is a positive idea at this point.
Source: New York Times, "Rushing Into a Mortgage Can Prove Costly," Paul Sullivan, Jan. 18, 2013