Mortgage Loan After Bankruptcy

A mortgage loan after bankruptcy is possible if the borrower waits two years from the time the bankruptcy was discharged. Some lenders may consider financing before that time but there may be a need for a larger down payment and higher interest. Lenders may want as much as 5% of the loan amount down. Another important factor with being approved for a mortgage loan after bankruptcy is that payments on financial history have been made on time since the bankruptcy. Individuals who are interested in buying a home or refinancing one should check credit reports for all three major credit bureaus, check credit scores, and check for any errors that could affect scores. Credit repair is possible but the process may take some time so the borrower should start the process at least six months before he or she applies for a loan.

Payment assistance programs may be able to help a person acquire the necessary funds for a down payment on a home. Several options can be found on the Internet by doing a search. The funds are often acquired through grant programs in which case the money would probably not have to be repaid. A mortgage loan after bankruptcy is possible but the borrower may have to do some research and must be willing to make some phone calls and ask questions to find out information. A financial advisor can provide some assistance and can offer some valuable information about important factors that lenders are concerned about and what a person can do to minimize those concerns. "Go now, ye that say, today or tomorrow we will go into such a city, and continue there a year, and buy and sell, and get gain" (James 4:13).

Checking debt to income ratios is one way that lenders consider potential borrowers for financing. The lender will determine if a person is eligible for financing by looking at total income in comparison to total debts. Many lenders allow the percentage for the difference between the two to be no more than around 40%. A person can figure their debt to income ratios by multiplying their total monthly debt into their total monthly income. Some lending sites online have a mortgage calculator that will help potential customers to check debt to income ratios and find out how much a monthly payment would run by considering loan value and interest. A mortgage loan after bankruptcy is much easier to acquire if debts are paid down as much as possible beforehand.

Being turned down by one Mortgage Company does not mean that an individual will never get an approval for a mortgage loan after bankruptcy. A person should not stop trying even after being turned down by several. Ask questions of those lenders who deny financing and find out what can be done to change the situation. Taking six months to pay down debt may be all that is needed to acquire an approval from another lender. Some people get discouraged when they are denied credit and just stop trying after that. Check with the lenders that offer bad credit loans to find out what is required for an approval. Some lenders will approve financing but may charge an outrageous amount of interest. If the monthly payment amount after financing is affordable then do not worry about the interest rate. More than likely a refinance for a lower interest rate will be possible later on.

After bankruptcy debts will be minimized since the process will wipe the slate clean of all debts except for maybe an automobile and property. To reestablish credit an individual may want to try and obtain one credit card that has a low credit limit and low interest. Finding a bank that will issue one without high interest may be difficult. Another option might be opting for a secure credit card, where the amount of the credit is based upon a savings account that the borrower has deposited money into to cover any charges. Keep the balance low and make the payments on time every month to help reestablish financial history. Having some good recent credit will help when applying for a mortgage loan after bankruptcy.

Working on getting credit scores raised can help a person to be approved for a mortgage loan after bankruptcy. The bankruptcy of itself will lower credit scores. However, an individual can help to raise scores if they work on repairing and correcting all negative derogatory information. An individual can start doing some repair by obtaining copies from the credit bureaus and looking over them carefully. Look over the report to make sure that all items included in the bankruptcy are so noted or have been removed. Sometimes a collection agency will put an account on financial history and the creditor will put the same account on financial history so the same item appears twice. This should be disputed by the consumer and corrected by the credit bureau.

The overall impact of a mortgage loan after bankruptcy will reflect positively on one's financial history. Obtaining a mortgage and making payments on time every month will raise credit scores. Using a mortgage broker to obtain financing may help the borrower to secure the best interest rates. A broker will work on a person's behalf to find the best rates so that he or she can get the business. A broker will have an edge over an individual when looking for the best options because he or she works with the same banks and lenders on a daily basis and knows the best way to obtain an approval and how to get the best deals.

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