Bankruptcy

A Step-By-Step Guide to Get Mortgage after Bankruptcy

People often find it almost impossible to get mortgage after bankruptcy. Though it is true that it is not easy at all to find lenders for this purpose, it is not at all a completely impossible task. If you follow the right approach and go ahead with the right plan, you can find a lender who will be willing to offer you a mortgage loan on decent terms. The key to success in this regard is to start rebuilding your credit immediately. So, roll up your sleeves; here are the steps that you have to follow.

Determine How Long You Can Wait

The longer you can wait, the easier it will be for you to qualify for a good mortgage program. Most lenders require the bankrupt individuals to wait at least one or two years before applying for mortgage after bankruptcy. Even if you do not want to wait that long, you must at least wait for six months. The idea is to get yourself enough time to rebuild your credit. During this waiting period, you will be doing everything that fills your credit report with some positive entries, leading a decent boost in your FICO score. Make sure you do not apply for further loans during this period. You should not even place queries for loans or credit cards. All such attempts will further damage your score.

Apply For as Much Amount of Loan as You can Afford to Repay

Once that waiting period is over, you should first closely examine your finances. Be very honest in your calculation. Work on that excel sheet, listing all your incomes and expenses. It will get you a clear picture of your current financial position. If your employment record has been decent for the last six months, you can easily get preapproved for mortgage after bankruptcy up to 30% of your pre-tax income. Make sure that the total amount of money that you are borrowing is something that you can easily repay on your own. After all, you do not want to put yourself into deep debt problems again.

Gather All Your Documents

Besides checking your credit history, the lenders will also like to look into other details, such as your bank statements, income records, salary slips, and other details. So, get all the relevant documents together. Make sure you attach all those documents ((even those that are not asked by the lenders) that can help you convince the lender that you have the ability to repay the loan amount in a timely manner.

Expect to Pay at Least 5% of the Loan Amount as Down Payment

It is usually not possible to get 100% financing as part of mortgage after bankruptcy. You must be ready to pay at least 5% of the total amount as down payment. There is no upper limit though. You can pay as much down payment as you comfortably can. The higher the down payment, the more favorable the terms of the loan will be.

It is also important for you to keep in mind that even after following all these steps, you may still be charged a comparatively much higher rate of interest than usual on your mortgage. But, once you get mortgage after bankruptcy, you will always have the option to refinance the same on lower rate once you achieve a better credit score. The idea is to be consistent in your efforts to build your credit.


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Posted in Bankruptcy, Life After Bankruptcy | 1 Comment »

One Response to “A Step-By-Step Guide to Get Mortgage after Bankruptcy”

  1. John says:

    Very relevant steps mentioned in the article to get mortgage after Bankruptcy. It is my advice to every one to be ready to roll up your sleeves and follow the steps, definitely you get the success. Life after Bankruptcy changes to some extent. Financial condition starts coming back on the tracks. This is the time which one can use to improve his/ her credit score. If you want to take a mortgage loan, then you have to start the preparation just after the insolvency. You have to do some thing extra to really improve your credit score and do not even call the companies for any loan or credit card etc. If you do a query call to the companies for a loan or any credit card, it affects your credit score badly. It is very truly said in the article that Apply for as much amount of loan as you can afford to repay so always be careful while applying for the same otherwise it will generate the problems in your life. To get the approval for loan easily, your employment record should be vertex for the last six to seven months

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