Bankruptcy can be described as a legal status of a person that cannot make repayments of debts owed to creditors. Going into or filing for bankruptcy closes up opportunities or shuts down your ability to borrow money or use a credit card. Also, bankruptcy reduces your credit ratings.
However, with proper preparation and financial planning, it is easy to say that obtaining a mortgage after bankruptcy is totally possible.
Important things to know before considering applying for a home loan or carryout mortgage application after bankruptcy:
The important things to know include:
1. Wait period: there is a specific time frame or waiting periods for getting a mortgage after bankruptcy. Majorly, the standard time it takes for you to apply for a mortgage after bankruptcy is two years and is advisable to use the waiting periods to improve your credit ratings so that the lender will not disqualify you after a bankruptcy discharge.
2. Detail mortgage application: the only way to guarantee your ability and willingness to repay the mortgage is to completely analyses your financial situation. So it is important to provide the mortgage company with any financial information requested of you. Note that the lender, will not approve a loan request if they feel that the borrower is likely to repeat past mistakes that made the borrower file for bankruptcy.
3. Apply for an FHA mortgage: FHA mortgage is a mortgage insured by the a Federal Housing Administration. After waiting for two years or more after your bankruptcy have been discharged, it is advisable to apply for FHA mortgage loan especially after receiving discharge from a chapter 7 bankruptcy. And be prepared to explain why you had difficulties financially and also what plan you have to make sure it doesn’t happen again.
Steps taken to apply for a mortgage after bankruptcy:
there are steps taken to ensure and be able to carry out mortgage application after bankruptcy. They are:
1. Discharge all available debts: the first thing to do is to make sure that the bankruptcy is discharged. If this is not done, no lender will speak you. And after this is done, you organize and scrutinize your report, this is necessary to counter errors that may appear on your credit report. For example, if there are debts that have been paid but still appear as unpaid on your credit report, when you org anise or scrutinize your report thoroughly, such errors won’t occur.
2. Pay bills on time: one major factor that improves your credit ratings and gives a higher chance of being able to get a mortgage after bankruptcy is your quick and early payments of all bills that have to be paid.
3. Apply for credit cards: another fast way of rebuilding your credit score is to apply for a secured credit card as soon as possible. These cards require that you hold on an amount in an account and lend you up to a matching amount as a credit limit.#
4. Wait for at least two years: this is important because the interest rates will be more favorable when you wait for two years after your bankruptcy is discharged than when you immediately apply for a mortgage after discharging your bankruptcy. Also, the waiting period gives you the chance to build up your credit well and save up money so that you can make good down payments remembering that the higher your down payment, the lower your interest made.
Knowing very well that it is hard but not impossible to apply for a mortgage after bankruptcy with a good mortgage information, it is also very essential to understand that all the rules and steps to ensure the application is successful solely depends on you not making the same mistakes that made you go bankrupt before.