Getting a Mortgage After Bankruptcy

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Declaring bankruptcy is never a pleasant experience, but many people end up in this situation, and this could affect an individual’s qualification for a future mortgage. Getting a mortgage after bankruptcy used to be difficult, but with some simple tips, you can get your records and finances straightened out and subsequently qualify for a mortgage. The tips discussed below will significantly help you on your quest to get a mortgage after declaring bankruptcy.

Give it Time

The first step is to give yourself ample time; it is advised that you wait for at least two years after you file for bankruptcy before you apply for a new mortgage. The chances of getting a mortgage are significantly increased if you apply two years after bankruptcy, as your lender sees you as capable of financing the home if you have been able to make all necessary payments. However, this does not mitigate the fact that getting a mortgage within two years of filing bankruptcy will be more difficult. It requires you to have a great history of payment after filing and a down payment of at least three percent of the loan. Interest rates might also be high.

Good Credit

excellent credit score

The next step to help you get a mortgage after bankruptcy is to clean up your credit. This greatly helps reduce your rates, especially when you get a credit card, and you use it for payments that can regularly be settled every month. This goes a long way to tell your lenders that you can meet payments and also helps improve your credit score. Meeting up with a credit counsellor and notifying your lender also informs the that you have made necessary steps to tackle your debt problem.  A good payment history for two years gives a favourable impression.

Save for a Down Payment

After successfully completing your bankruptcy payments, the final step towards getting a mortgage is making plans for a down payment. In some unfortunate cases, people are unable to qualify for mortgage loans because they do not have enough for a down payment. In such cases, it is best to seek assistance from programs designed to help. You could also source for funds from friends and relatives, but it is best to consult with your lender before taking that step, as some lenders are particular about the source of the down payment.

Following the steps mentioned above will put you in a good position for a mortgage–you might even get a better rate than a person with a clean slate. To compare the different mortgage rates in your area, enter your postal code below.

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