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6 tips for getting a home equity loan after bankruptcy
Filing for bankruptcy can be a challenging and overwhelming period in your financial journey. But while the bankruptcy process can be tough, and can result in serious financial hurdles, it’s also a relatively common option to choose. For example, annual bankruptcy filings totaled 452,990 in 2023, according to a report from the Administrative Office of the U.S. Courts — an increase of nearly 17% compared to 2022, when 387,721 bankruptcy cases were filed.
Given the current challenges posed by today’s economic environment, the increase in bankruptcy filings year-over-year makes sense. For starters, persistent inflation issues have led to higher prices on consumer goods, causing budgets to be stretched thin. And, the current high-rate environment has led to hefty borrowing costs across the board, putting even more strain on many people’s finances.
But if you’ve filed for bankruptcy recently — or are planning to — it’s important to understand that bankruptcy does not have to be a dead end. In fact, it can be a starting point for rebuilding your financial health, and if you’re a homeowner, obtaining a home equity loan may be a crucial step in that process. That said, it won’t be an easy path to securing a home equity loan after bankruptcy, but the below tips can help.
Compare your home equity loan options online here.
6 tips for getting a home equity loan after bankruptcy
Getting a home equity loan after a bankruptcy can be difficult but there are ways you can improve your chances of approval. Specifically, borrowers will want to:
Understand the timing
Bankruptcy can stay on your credit report for anywhere from seven to 10 years, depending on the type of bankruptcy filed. While this might seem discouraging, it’s crucial to recognize that lenders typically become more willing to work with you as time passes.
As the bankruptcy filing moves further into the past, lenders may view your financial situation more favorably, upping your chances of getting approved for a home equity loan. So rather than applying right after a bankruptcy filing, be patient and proactive about your credit during that time instead.
Learn more about the home equity loan rates you could qualify for here.
Rebuild your credit
After bankruptcy, rebuilding your credit should become a top priority. Start by obtaining a copy of your credit report to ensure accuracy. Then, focus on paying bills on time, reducing outstanding debts and gradually improving your credit score.
Establishing a positive payment history will demonstrate to lenders that you are committed to financial responsibility. You can also consider using secured credit cards or becoming an authorized user on a friend or family member’s credit card to add positive information to your credit report.
Shop around for lenders
Not all home equity lenders will have the same criteria or policies regarding post-bankruptcy lending — the same way that not all lenders offer the same types of loans, terms or rates. So, if you’re looking for a home equity loan after bankruptcy, it can benefit you to take the time to research and shop around for lenders who specialize in working with borrowers who have experienced financial setbacks.
For example, while traditional banks may have stricter requirements, there are financial institutions and online home equity lenders that may be more flexible in their evaluation process. As you conduct your search, be sure to compare interest rates, terms and fees to find the most favorable option for your circumstances.
Consider a co-signer
A co-signer with a strong credit history can significantly enhance your chances of securing a home equity loan after bankruptcy. When you add a co-signer to a loan, they’re essentially vouching for your ability to repay the loan, giving lenders added assurance — which can be vital after a bankruptcy.
However, it’s important to recognize that the co-signer you use is equally responsible for the loan, and any default could negatively impact their credit, so be sure that you have the ability to repay the loan before adding another party to the obligation. Open communication and trust are key when involving a co-signer in the loan application process.
Highlight positive financial changes
When applying for a home equity loan after a bankruptcy, it can help to be prepared and provide evidence of positive financial changes you’ve made in the time since. This could include stable employment, increased income or successful management of other debts. Demonstrating responsible financial behavior and a commitment to improving your financial standing will make a positive impression on lenders. That, in turn, can enhance your chances of being approved for a loan.
Seek professional guidance
Navigating the complexities of obtaining a home equity loan after bankruptcy can be challenging, so seeking professional guidance can be a wise move in some circumstances. For example, it may help to consult with a financial advisor or mortgage broker who specializes in post-bankruptcy financing. They can provide personalized advice based on your specific situation, help you understand the requirements of different lenders and guide you through the application process.
The bottom line
Securing a home equity loan after bankruptcy is undoubtedly a challenging task, but it’s not impossible. By understanding the timing, actively rebuilding your credit, shopping around for lenders, considering a co-signer, highlighting positive financial changes and seeking professional guidance when you need it you can increase your chances of obtaining a home equity loan that works for you. The process won’t be easy, though, so patience and persistence are key elements in your journey toward financial recovery.
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$100 million in federal funds released for North Carolina to rebuild roads, bridges damaged by Helene
Washington, D.C. – The U.S. Department of Transportation released $100 million in emergency funds on Saturday for North Carolina to rebuild its roads and bridges damaged by Helene.
“We are providing this initial round of funding so there’s no delay getting roads repaired and reopened, and re-establishing critical routes,” said U.S. Transportation Secretary Pete Buttigieg in a statement. “The Biden-Harris administration will be with North Carolina every step of the way, and today’s emergency funding to help get transportation networks back up and running safely will be followed by additional federal resources.”
The storm caused rampant flooding that has devastated several towns and killed more than 225 people – with CBS News confirming at least 114 people killed in North Carolina. There was more than 8 inches of rain across the western North Carolina mountains, with some areas seeing more than a foot.
Hundreds of roads across Western North Carolina remain closed, leading to an increase in air traffic as teams scour the region for survivors by air. Air traffic over Western North Carolina has increased by 300% due to relief efforts since the storm cleared, the Federal Aviation Administration and the North Carolina Department of Transportation.
Mudslides blocked Interstate 40 and other highways in North Carolina and about 400 roads were closed due to damage from Helene. Interstate 40 was damaged at several locations, the Department of Transportation said.
President Biden visited the Carolinas on Wednesday, surveying the flood damage by air from Greenville, South Carolina, to Asheville, North Carolina. Mr. Biden announced the federal government would cover “100%” of all debris removal and emergency protective measure costs in North Carolina for six months.
The Department of Transportation said these relief funds will allow the North Carolina Department of Transportation to act more quickly to fund eligible repairs to their damaged facilities.
Li Cohen and
contributed to this report.
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Tropical Storm Milton forms in Gulf; forecast to strengthen into hurricane headed toward Florida
Tropical Storm Milton has formed in the Gulf of Mexico and is forecast to strengthen into a hurricane headed toward Florida with possible impacts to its western coast, the National Hurricane Center said on Saturday. Maximum sustained winds are expected to be at 40 mph with higher gusts and Milton is currently moving north-northeast, NHC said in an advisory.
Milton is forecast to undergo a period of rapid intensification before it makes landfall as a Category 2 hurricane across Florida’s west coast, CBS News Miami reported.
The forecast comes a little more than a week after Hurricane Helene made landfall in Florida and across the Southeast, killing more than 200 people and causing immense destruction. President Biden on Thursday took an aerial tour of Florida’s Big Bend where Helene struck as a Category 4 storm. Hundreds of people are still missing and Mr. Biden said the work to rebuild will cost “billions of dollars” as communities suffer still without power, running water and passable roads.
Milton is forecast to move across the southwestern Gulf of Mexico through Sunday night then across the south-central Gulf on Monday and Tuesday before reaching Florida’s west coast by the middle of the week, NHC said. Heavy rain is possible in the region starting Sunday into Monday, CBS Miami reported, and more rain and heavy winds will most likely arrive on Wednesday. Hurricane and storm surge watches will most likely be required for portions of Florida starting Sunday, the National Hurricane Center said.
Along with the heavy rainfall, the hurricane center said to expect risks of flooding.
Residents in the area should ensure they have a hurricane plan in place, the National Hurricane Center said, follow the advice of local officials and check back for forecast updates.