About Bankruptcy

Getting a Mortgage After Bankruptcy

If you have recently filed for bankruptcy, many questions would go through your mind. Number one thing you would ask yourself is, 'how soon could I get a loan?' You can see this question coming, especially when you have plans on making major purchases such as home buying. 

Not to discourage you or anything but it is difficult to pursue your dreams of becoming a homeowner during tough times like this. The common notion is when people undergo bankruptcy; it is almost hopeless to get a loan. Indeed, most lenders would normally decline their mortgage application at times like this. That is if you apply for loan instantaneously after filing for bankruptcy. 

So how do you get a mortgage loan during these times? There is no easy way to getting the loan you want. Most experts would generally say, it would take 3-4 years before you can apply for your next debt. However, you do not have to wait that long. All it takes are the following tips: 

Repair Credit 

Getting mortgage after bankruptcy does not happen in an instant. Since bankruptcy had a negative impact on credit scores (and most of your debts will be discharged), one has to re-establish credit. 

So how do you do this when in fact it is hard to get a loan or a credit card? First, you have to make use of secured debts. This works like a credit card only that your limit will be defined by the deposited amount. Some cards have a credit re-builder program to make it easier for you to do the repair. 

Some would also resort to obtaining car loans. However, you must know that this kind of transaction would be very expensive. However, this is a major purchase and can be a long-term loan. Obtaining them and paying them on time would look good on your credit reports. 

Existing debts that were not discharged should be settled. You have to make sure that while you pay it off, you do it timely. 

Increase Debt to Income Ratio 

When you apply for mortgage, this ratio is one of the most important factors in granting the loan. So how do you increase it? It is very simple. You just have to make sure your outstanding debt is low. Doing this would make your income look good. Better yet, you can try finding alternative sources to raise your income. 

Look for Credit Companies who Submits Credit Reports 

Don't you think it is useless to make timely payments, yet all of these things would come unrecognized? Definitely, it is. Therefore, when you apply for credit make sure they report your performance to various credit bureaus. Remember, mortgage lenders rely on their report for calculation of credit scores. 

On the Day of Applying for Mortgage 

If the effort of repairing credit goes flawlessly, the tendency is you might be eligible for mortgage within the 2-year mark. Of course, you have to wait for your other debts to be discharged. However, when you have found a company that is willing to give you the loan, the number 1 thing you should consider is giving a high down payment. Don't settle for just 20%. Go higher than that. Doing this, would save you from making an expensive loan, as you cut short the time from being drowned by the killer interest rates.

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