April 15, 2024


Mad about real estate

How to Qualify for Mortgage after Bankruptcy

            After declaring bankruptcy, you might wonder when you can qualify for a home mortgage. Your credit score will naturally plunge down after insolvency. The most basic question is when you will be able to qualify to file for mortgage. Actually it is not very hard to get a mortgage after bankruptcy if you have tried to build up a good credit score. You can obtain low mortgage loans like home equity loans, interest only loans and even a business venture funding.

It does not mean that you can no longer be given a chance to purchase a home after you declare yourself bankrupt. There are plenty of lending source in America. They are known as the “B-C-D” lenders. They specialize in helping people who file for bankruptcy and therefore do not qualify for a conventional mortgage. There are however drawbacks like very high interest rates, fees and equally very high deposit. It will also take longer since you still have to establish a good and strong employment record and you must save money for a down payment.

            Consult a good mortgage broker to help you determine whether you qualify for a home mortgage after bankruptcy. The mortgage broker can gather your data and information and shop around for several mortgage lenders that will accept your mortgage application.

            To build up a good credit to improve your credit score, you have to continue paying for items such as your home or cars that were not discharged in the bankruptcy promptly. Maintain a low credit card account and lessen your bank loans. It is important that you take up a new credit only when it is very necessary.  Your debt-to-income ratio will be focused on by the mortgage lender. This helps them determine whether you have the capability to repay your mortgage. It is essential to provide all the necessary documents immediately to your loan consultant. Any information and data on your credit report must be checked for accuracy. Any false data should be corrected immediately.

After your credit reports are updated, you can now be eligible for a better interest rate on a home mortgage. It is best to wait for two years after your bankruptcy discharge to file for a mortgage. However, you can still buy a home before that but it will cost you thousands of money since you have to pay very high interest rate and deposit. The high deposit is necessary to assure the mortgage lender and will convince them to lend you the money to purchase a house.

             Again, it is preferable to file for mortgage from two to three years after declaring insolvency. Interest rates after bankruptcy could reach as high as twelve points higher than regular mortgage. After your insolvency, you have to deal with credit history before bankruptcy, the reasons for the bankruptcy and how you can handle home loan finances after insolvency.

            If you do not qualify for a home mortgage after bankruptcy, do not despair. These things can take a lot of time and usually needs your utmost patience. Following the suggestions above and you can have more options later on and can avail of mortgage as early as six months to a year after your bankruptcy discharge.