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Buying a home following a personal bankruptcy filing

by | Nov 7, 2012 | Firm News, Personal Bankruptcy

California residents who are buried in consumer debt and looking for relief may find comfort in a new report that focuses buyers who are shopping for new homes following past foreclosures or personal bankruptcy filings. Real estate agents and mortgage brokers report high numbers of these ‘boomerang buyers’ in the market. That trend is expected to continue as many consumers reach the three-year mark that is the typical waiting period before a buyer with a history of foreclosure or personal bankruptcy can apply for a federally backed mortgage.

There are a multitude of circumstances that can lead an individual to require debt relief through bankruptcy. Many consumers began to struggle when their adjustable-rate mortgages shifted, bringing their payments to levels that could not be met. Others lost their jobs in a struggling economy, and have had difficulty finding work to replace that lost income. Still others experienced illness or injury that left them with loads of medical debt and challenges to employment.

No matter the reason for financial difficulties, it is important to understand that debt relief is available in the form of a personal bankruptcy filing. Such a choice can not only eliminate a portion of consumer debt, it can also give an individual or family a fresh financial start. By leveraging that opportunity to rebuild one’s credit and save for a down payment, consumers can be ready to purchase a home anywhere from one to three years following a bankruptcy discharge.

According to this report, aspiring homeowners in California could qualify for a mortgage through a private lender as quickly as one year following personal bankruptcy. For federally-backed loans, that timeframe is three years. However, in order to qualify, individuals will still need to show sufficient income to make their estimated payments, as well as a recent credit history that demonstrates a responsible use of credit.

Source: Yahoo! Finance, “Buyers Back After Foreclosure,” Conor Dougherty, Oct. 14, 2012