Bankruptcy is an unfortunate situation that affects millions of people each year. Because of the damaging effects of bankruptcy, this means of eliminating debts should be reserved as a last resort. Yet, due to an array of circumstances, bankruptcy is the only alternative to relieve financial hardships. After a bankruptcy, many homeowners attempt to rebuild their credit by purchasing a home. While possible, there are certain limitations.

Qualifying for a Home Loan after Bankruptcy

Following a bankruptcy, many people choose not to finance large purchases such as a home or automobile. Several lenders will approve a loan application. Regrettably, these loans come with a huge price. After a recent discharge, auto loans may include interest rates up to 18%, whereas interest rates for homes may be several percentage points higher than the market average. In either case, you can expect much higher monthly payments, which limits your spending power.

In contrast, buying a home following a bankruptcy is one of the easiest methods to quickly re-establish credit. Hence, if you have the funds for a large mortgage payment, it doesn