Bankruptcy can make getting any kind of financing much more difficult. However, it’s not impossible anymore to get financing, even a few days after the discharge of a bankruptcy. But, is getting a loan soon after a bankruptcy a smart thing to do?
It can be tempting to buy a new home, new car, etc., after a bankruptcy discharge you have no debt left. You will probably feel like you can afford a larger house payment. Here are some factors to consider before committing yourself to a new house payment.
Pre-Payment Penalty – Almost every subprime loan (bad credit loan) now comes with a pre-payment penalty. This penalty is usually about 6 months worth of house payments. The pre-payment penalty period usually lasts 2-3 years. That means, if you want to refinance or sell your house in that period of time, that will make it very difficult, if not impossible to sell or refinance. That means that you are locked in. Once you sign those mortgage papers you absolutely have to make those payments. If you don’t have the amount of the pre-payment penalty in savings, you are locked into making the payments or losing the house.
Two Year Mark – Keep in...
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